Commercial fraud: advice for businesses

This type of fraud has been around for years but is still very common.

It starts by letters being sent to accounts departments. They take the appearance of an invoice or even a letter threatening legal action for non-payment. The invoices are usually for advertisements in international business directories - usually a telephone or fax directory. Very often there is no such publication.

Sometimes a copy of a page from a directory is sent - it will contain a listing for your business along with a request for payment. Very often the listing has simply been copied from a phone book.

If a publication has been produced with a listing you haven't agreed to, you do not have to pay.

Reduce the risk

• do not pay for any unsolicited goods or services
• alert your staff to these types of scams
• don't be threatened by any proposed civil action against you
• report any incidents to the Fraud Squad at Kent Police or your local trading standards department.

Publishing fraud

This type of fraud usually involves businesses receiving a cold phone call from someone claiming to represent a charity or any of the emergency services. They will claim to be producing a publication (such as a diary, local business directory or similar) with monies going to the good cause.

This type of fraud can take various forms but essentially the fraudsters are trying to get you to pay for advertising that will either never appear or will be used in a publication completely irrelevant to your business.

For example, in Kent a number of businesses were conned into advertising building and plumbing services in a local directory, only to find the final publication was distributed in a small area of Scotland or the North of England.

Another variation is that you will simply receive invoices or threatening letters from debt collection agencies asking for payment.

Reduce the risk:

If you are approached to take part in this type of scheme make sure you:

• find out exactly who the organisation is and if they are genuine
• know the details of any publication, for example, who it is aimed at, where exactly is it distributed, how many people it will be distributed to 
• make some basic checks yourself - contact your local trading standards department or check with the Charity Commission
• don't pay for any unsolicited goods or services
• alert your staff to these types of scams
• report any concerns you have to the Fraud Squad at Kent Police or your local trading standards department

Long firm fraud

This type of fraud takes a lot of planning and organisation and is frequently linked to organised crime groups.

A fraudster sets up a business, usually as a wholesaler, and then defrauds other businesses by obtaining stock or goods which aren't paid for.

The most likely targets are the suppliers of goods that have a quick turnover and can easily be disposed of, such as household goods, electrical items, toiletries, toys, fancy goods and foodstuff.

Initially a small order is placed and paid for, thereby lulling the supplier into a false sense of security. Then a much larger order is placed which isn't paid for.

The fraudster will have bought an 'off-the-peg' company or operate as a sole trader. They will supply credit references from another company they 'control' or from another company they have traded legitimately with (although ultimately they will go on to defraud them too). They may also falsely claim membership of trade or professional organisations in order to increase their credibility.

Reduce the risk:

• thoroughly check the credit references given and the businesses they relate to
• consider a physical visit to the business premises
• be aware of sudden changes in ordering patterns, for example, increased order size
• alert staff, particularly accounts departments, to these types of scams

Data protection letters

In recent years there has been significant new legislation on the recording, storage and use of personal information.

A number of fraudsters have tried to exploit the lack of common knowledge of the rules and send letters to companies asking for a fee to make sure the company is data protection compliant. 

Reduce the risk:

If you need to know more about Data Protection, please contact:

Information Commissioner, Wycliffe House, Water Lane, Wilmslow, Cheshire SK9 5AF

Telephone: 01625 545700

Or visit www.informationcommissioner.gov.uk -you will find detailed information on recent legislation and how it may impact on your business.

Phone scams

There are a number of variations on this type of scam. It may involve the fraudster trying to obtain your Merchant number so that it can be used to authorise bogus transactions. Alternatively it may be an attempt to obtain your customer's card details.

Here is an example of a typical phone call made by the fraudster.

"Hello, I'm from VISA. There has been a problem with your verification system. Please give me details of all the credit card transactions made in the last hour. If you fail do this your company will not be paid for the transactions..."

Reduce the risk:

• never give out personal or account information over the phone

The real VISA/Mastercard department will never ask for details about the card since they already have all the information. 

Report fraud and get advice

You can get more advice and report suspected fraud to Action Fraud UK:

• call 0300 123 2040
• visit the Action Fraud website and report the fraud online.