SMEs in the UK are losing up to £9bn every year thanks to fraudulent invoicing scams. That’s the sobering news from Tungsten Network today, which reports that nearly half of businesses wouldn’t know what to do if they received a fraudulent invoice. The news highlights SME’s growing exposure to a whole range of fraudulent activities.
According to the research, nearly half (48%) of all businesses that were surveyed reported receiving a fraudulent or suspicious invoice in the last year. That number is growing, and the methods used by the scammers are also changing. Tungsten reported that typical scams included embedding viruses in attachments (malware); unknown invoices attached to an email or sent by post (phishing); false changes to bank details; and sending duplicate invoices.
The Tungsten research highlighted a local authority – Bexley in London – that has been the target of repeated scams. Bel Temel, Payments Manager said, “In most cases, the criminals have taken information from the internet to ensure the bogus invoice looks identical to the template of one of our suppliers. Generally the only way the naked eye can spot any difference is by cross referencing the bank details with those we have listed for our supplier.”
Government taking action
The government has recognised the growing threat, and in February it launched the Joint Fraud Taskforce, consisting of representatives from the City of London Police, National Crime Agency, Financial Fraud Action UK, the Bank of England, and chief executives of the major banks.
Pauline Smith, Head of Action Fraud, the UK’s national centre for reporting fraud and internet crime, said: “It is important that employees are made aware of invoice scams and are ready to recognise the signs of fraud. Incidents of invoice fraud are under-reported and therefore it is difficult to know the true scale of this fraud type. However what we do know is that this type of fraud prevails across all types of business and no one type of industry is immune. Those organisations that are worried they may fallen victim to fraudsters should always report to Action Fraud.”
So how can SMEs protect themselves from this growing threat? E-invoicing is an obvious method, which can remove the risk of duplicate and fraudulent paper invoices. Even with a more updated system, however, vigilance and good staff training are still vital in protecting organisations.