BUSINESS FRAUD
What Is Business Fraud?
The companies and business affected by company fraud tend not to be the multi nationals or household names, more so mid tier businesses, and the perpetrators are extremely well organised with their knowledge of the targeted companies.
A sophisticated approach in defrauding a company will involve providing documents and references from accountants and solicitors. Numerous addresses will be used, especially for the delivery of goods, which makes the recovery of delivered goods or the intervention of the police all the more difficult.
Targeted Goods
There is certainly a major focus on all retail electrical goods, including high value a/v electrical items such as plasma screen televisions, and computer products, components and peripherals. Other targeted goods include printer cartridges, mobile phones, furniture and high-class merchandise such as clothing, branded accessories and sports goods. The focus even extends to elements in construction.
In some cases it is quite obvious that the fraud has been executed with a specific shopping list in mind – to the point where there are probably existing outlets for products. These frauds tend to be quite complex and professional, and so can use the maximum time scale needed to gain the most benefit. However, there still are a large number of smaller criminals operating who are looking for one good hit on goods that they can shift quickly for cash.
The type of fraud operation can be determined by the amount of product an operation is able to handle.
How Is Business Fraud Committed?
The Internet acts in two key ways to that increase both company fraud and identity theft.
Firstly, the internet is a ready source of identification of potential suppliers, which is then used as a faceless interface to commit fraud, or as a tool to commit fraud. The internet has caused a major increase in identity theft and will continue to do so.
When attempting to assume the identity of a chosen company or business, the fraudsters need only the details that are supplied in the public domain. All that is needed is a point of contact – they can telephone or email a potential supplier requesting an alternative delivery address – which is not uncommon at all – and there you have it. No risk of setting off immediate alarm bells with the impersonated company or the supplier, whilst giving the fraudsters the opportunity to gain more goods, quicker, all under their control.
In the past, fraudsters attempting to commit this type of fraud would have to have gained some knowledge of the company impersonated and its’ products, otherwise the sting would be less than successful.
Today, there are many demands on businesses to deliver quickly and to drive their business forward. The volume of telephone sales orders has dramatically increased over the last 10 years, and it still remains the main route used when committing fraud, with traditional fax documentation, etc. being used. This route has also been used for fraudsters to place orders on existing customer accounts. By simply stating that they do not have their account number to hand, most barriers to supply are removed.
The traditional long firm is still a regular occurrence. As a result of the above however, this is more time consuming to establish using traditionally recognised methods. Many have now looked at using the documents filing system at Companies House, and influencing the opinions of credit reference agencies accordingly. This process may take up to a number weeks to mature, and so the approach tends to be almost professional in its execution – notifying Companies House of changes in company directors, secretaries or registered addresses without the knowledge of the real company. Then, with the real company completely unaware, the fraudsters will trade on those changes.
Accommodation addresses provide a legitimate front and will protect the fraudulent operation for the maximum period, even if they have not visited the office for some time. An address provides the operation with an effective mask, and there is very little that can be done to validate the business in question until events have spiraled out of control.
The geographic boundaries, and the lack of centralisation of information between companies and suppliers is a major factor in not allowing the true scale of these offences to be identified - either quickly enough or not at all. Suppliers based around the country will report these incidences to their local police. However, the extent of the damage, which can run into tens and hundreds of thousands – at least, in some cases - is not identified at an early enough stage for action to be taken. All fraudsters use this factor to their advantage when planning and preparing a fraudulent operation, safe in the knowledge that the true scale of their operation will not come to light for a significant period of time, giving them plenty of time to maximise their supply.
What Can You Do To Protect Yourself
If you believe you’re company is a victim, or is being targeted as a victim of company fraud, immediately report your concerns to your local police.
Check and verify your business details with Companies House