With the growth of chip and pin, fraudsters are turning from personal to corporate ID theft and FLA members are seeing alarming increases in the growth of company hi-jacking – currently costing businesses & other organisations an estimated £50million a year.
This figure is set to increase, says FLA, unless companies start protecting themselves – both against having their own identity stolen and against providing goods or services to bogus companies.
FLA members, who together provided £25 billion of new finance to businesses in 2004, have tightened their checking procedures before offering loans or leases and FLA urges other companies to do the same to ensure they don’t fall foul of fraudsters.
“This type of fraud is simplicity itself for professional gangs,” says Diane Williams, Principal Consultant for FLA. “It can have a devastating impact both on those whose company details are hi-jacked and on suppliers who find they have inadvertently provided goods or services to non-existent or bogus companies. Losses in terms of time, money – and reputation - can be enormous.”
Some simple checks can help businesses protect against ID fraud, which can result in a costly and time-consuming struggle to re-establish their own company history and credit worthiness.
A common form of corporate ID fraud involves records held at Companies House. Thieves buy goods using the name and reputation of an established business having first changed its registered office address with Companies House. Goods are delivered to the ‘new’ address and it may be weeks before the scam comes to light – by which time goods and fraudsters have long since gone. The supplier stands to lose both goods and payment and the victimised company may have to go through a lengthy process to correct its records and regain its reputation and credit worthiness.
A similar effect can be achieved by fraudsters changing a company name slightly with Companies House records to obtain goods or finance by giving the impression that they are acting as a branch or subsidiary of the legitimate company. A cursory check may not ring alarm bells.
Stephen Bassett, Chief Operations Officer of FLA member Broadcastle plc, explains: “There are all sorts of tricks we have come across. Gangs may log themselves as a company director with Companies House and the next time someone checks out the company, they will be listed and so seem legitimate. Or they may buy a legitimate company, one that has been long standing so has a good credit standing and when suppliers check them out, they seem authentic and so they supply the equipment. The gang then sells all the equipment, puts that company into liquidation and moves on to the next one – a sort of conveyor belt of shifting identities!”
FLA members have already put in place stringent checking procedures which could be emulated by businesses generally.
At GE Commercial Finance for example, a ‘Know Your Customer’ regime has been implemented to help spot and prevent potential fraud.
Says Diane: “In National ID Fraud Week, businesses would do themselves an enormous favour by implementing some simple protection measures. Top of the list is to take advantage of new systems introduced by Companies House earlier this year to help thwart thieves.”
Register with the Companies House free efiling ‘Proof’ scheme. This ensures that information can only be filed electronically using passwords, confidential authentication codes and recognised email addresses to make it more difficult for thieves to change company details. Invest £60 a year to subscribe to the Companies House Direct service to make use of the ‘Monitor’ system at fifty pence per year for each company monitored. This service will deliver an email alert whenever details on company records are changed. Credit Reference Agencies also have similar schemes in place for a small outlay.
Companies unprotected by these measures could more easily fall foul of fraudsters changing information such as addresses or directors’ names and then using this information to obtain goods or services illicitly. There have been 114 cases of change of registered office without consent at Companies House from January to July 2005.
Companies should also invest in a shredder to ensure that they destroy their own - and other - company records that could give criminals a helping hand.
And says FLA, they should put the following checks into place:
- Make sure company records held by Companies House and by Credit Reference Agencies such as Experian have up to date and accurate information.
- Always check the validity of companies requesting credit facilities for goods or services. Don’t just rely on a quick check with Companies House since records may have been fraudulently changed.
- Tom Craig, whose company Amarlis advises companies internationally on ways of combating corporate crime, suggests other checks businesses can use: “I’d advise companies to check, re-check and check again before giving credit, ideally with more than one source. When delivering goods, insist that a named person giving proof of identity receives and signs for them.”
He also advises small company bosses to put processes and policies in place to make it less easy for crooks to dupe vulnerable staff.
“All companies will invest in security measures to keep out burglars,” he says, “yet fraud is far more serious and has a much longer term impact than burglary. It is amazing how few businesses invest in the relatively small amounts of time and money it takes to protect themselves against these criminals. Inertia could prove very costly.”
Quelle: Publictechnology, 18.10.2005
