How to spot signs of fraud

Fraud is now the most common crime in the UK, causing serious harm to businesses. In the UK alone fraud was valued at £2.3 billion in 2023 and it was reported that 50% of businesses have been victims of fraud between 2021-23. From a global perspective escalating levels of fraud are costing more than $4.7 trillion annually.
Understanding the types of fraud that your business might be at risk from is a crucial first step to protecting it. The two main types of fraud that our underwriters most commonly come across are Buyer fraud, and Impersonation fraud.

Buyer fraud occurs when a business is created with the sole intention to defraud the seller by obtaining goods and evading payment. This may be by falsely claiming non-receipt of the items or simply refusing to pay the invoice.

Impersonation fraud, as the name suggests, is when a fraudster will impersonate a strong credit worthy buyer and have the goods sent to them. The impersonated buyer will then receive the invoice for goods they have not ordered or received.

As fraudsters get more sophisticated with their techniques spotting fraud is getting increasingly more difficult. It is more important than ever to know the red flags to look out for to protect your business. Look out for:

• Contact made via mobile with no landline provided
• Conflicting sectors – if the buyer is in a different trade sector to the supplier
• A professional looking website with little functionality
• Buyers who are too eager to supply information requested such as trade references or accounts
• Buyers who are generally not interested in price/no or little negotiation
• Registered office address being PO box addresses, serviced offices or residential
• An unusually short period between first contact, order, and delivery requested
• The buyer requesting to collect goods themselves often in unmarked vehicles or requesting to change the delivery address at short notice
• A one off low value order or one off large request following payment of several low value orders

 
With a credit insurance policy, we can help you to spot fraudulent buyers before the crime is committed. Our underwriters are trained to spot the key signals and can flag anything suspicious when reviewing your credit limit applications. However, with automated systems, a heavy reliance on credit reference agency reports, and when a business may chose to trade using their discretionary limit there is no substitute for having your own  comprehensive due diligence processes. So, what can you do to avoid being a victim of fraud?

• Take a contact name, phone number and website and check them out.
• Fraudsters usually use mobile numbers and Gmail or Hotmail email addresses, so be cautious if these details are provided.
• Google street view to validate the authenticity of the delivery address. 
• Beware of websites with very little functionality. 
• https://www.whois.com/whois provides a free service where you can check the creation date of an email or web domain to help clarify the authenticity of a business. Beware of recently created domains that are valid for just one year. 
• When reading any documents supplied ask yourself if the grammar and spelling used are what you would expect from a professional business. 

Spotting the red flags that can signal a fraudulent buyer might be the thing that prevents your business from being the 50% of businesses that are victims of fraud. However, it is important to keep in mind that if you spot just one of these points in isolation it does not automatically equal fraud. Instead, it is when a buyer has multiple red flags that you should start to investigate further. 

If you feel you have been a victim of fraud, we would recommend reporting it to Action Fraud: https://www.actionfraud.police.uk/.