Financial services (FS) firms are losing more than £165 million in fraud of bills each year.
By Eric on Thursday,
According to new research published today by Tungsten, this amounts to £1969 per business. Financial services, Of those affected, one in five believes that the fraud has cost them more than £5,000 in the last year.
Concern about the scale of the fraud is greater in the FS industry than other sectors with 61 percent perceiving it to be the single biggest threat facing their business – more so than losing a major contract, a member of staff or competitor activities. Fifty-eight percent of FS business owners are troubled by the rise in cybercrime, compared to a national average of 54 percent.
Of the FS companies surveyed, 60 percent have received a fraudulent or suspicious invoice in the last year – this is much more than any other sector and the national average of 47 percent. Tactics have included viruses embedded in attachments; unknown invoices attached to an email or sent by post; false changes to bank details and sending duplicate invoices.
Tungsten’s research exposes the need to crack down on fraud in the UK and is backed up by the Government, which in February launched a new Taskforce to combat fraud of all types. The Joint Fraud Taskforce will consist 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. While focused on consumer fraud, its launch shows the scale and seriousness of the situation and the Government’s desire to find and remove weak links in the UK’s financial systems and processes.
If they received a suspicious invoice, 43 per cent would contact the police or a reporting service like Action Fraud, showing that there is still an education job to do in terms of knowing how to handle cyber crime.
Richard Hurwitz, CEO at Tungsten, comments: “Considering all the challenges firms face every day, it’s telling that cybercrime looms so large. The FS industry seems particularly attuned to the threat, which is good, but there are steps they can take to protect themselves.
“Technology such as electronic invoicing can help them battle invoice fraud as only confirmed suppliers can upload their invoices and then these are validated before they are paid, potentially saving firms thousands of pounds. Tungsten now handles more than 15 million invoices a year, with firms in 192 countries around the world transacting across the network.”
Pauline Smith, Head of Action Fraud, the UK’s national center for reporting fraud and internet crime, said: “It is important that employees are made aware of invoice scams and are ready to recognize the signs of fraud. Incidents of invoice fraud are underreported and 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 organizations that are worried they may fall victim to fraudsters should always report to Action Fraud”.
Case study London Borough of Bexley:
Financial services , Invoice fraud is not just confined to businesses, with public sector organizations also falling victim. Bel Temel, the Payments Manager at the London Borough of Bexley, has witnessed multiple attempts of invoice fraud: “Our Borough has received fake invoices from anonymous professional fraudsters on more than one occasion. Our entire supplier, contact information is on our website so this means we’re at risk of scammers accessing this information and pretending to be one of our suppliers. In most cases, the criminals have taken information from the internet to make sure 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 referring to the bank details with those we have listed for our supplier. This means that the fake invoice can make it through every stage of the payment process before being picked up by us in the finance team. Unfortunately, Financial services other local authorities have lost money by not spotting this and paying the balance of a fake invoice into the fraudster’s bank account.
“One way in which we’ve further protected ourselves against this threat is by introducing electronic invoicing from Tungsten Network. Now our suppliers submit invoices through the platform, we know that every invoice received is 100 percent legitimate. The technology ensures the secure transacting of invoices and this has much helped us combat invoice fraud. Since our take-up of the technology in 2006, many other local authorities have followed suit.”