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According to a survey by banking trade body UK Finance, more than four in ten businesses are unaware of the risks of invoice fraud, even though such scams cost firms almost £93m in 2018.

The fraud happens when the criminals pose as legitimate payees and scam the businesses into sending them money they are not actually owed.

In 2018 there were 3,280 invoice and mandate fraud cases, with an average loss per case of £28,000.  Luckily around a third of the cash taken in this way was eventually returned to the businesses, but that leaves a lot of unrecovered funds, not to mention the stress and inconvenience of dealing with it.

UK Finance surveyed 1,500 firms across the UK and found that 55% of sole traders were aware of the threat of invoice fraud, compared with 68% of small businesses and 84% of large businesses.

As you might expect, large businesses were more likely to have systems in place to combat the scams, but were also more likely to have experienced fraud than smaller businesses being larger targets.

“Invoice fraud could happen to businesses of all sizes,” said Katy Worobec, managing director of economic crime at UK Finance.

“The gangs behind this type of fraud are increasingly sophisticated and will often get hold of details that allow them to pose convincingly as regular suppliers.

“If someone contacts you asking for a supplier’s bank account details to be changed, always verify with that supplier separately on the phone or in person, using the contact details you have on file.”

Invoice fraud involves the criminals pretending to be a supplier and making a request for their bank account details to be changed, often by email.  The businesses are then tricked into sending money to an account controlled by the fraudster rather than the genuine supplier.

Often the criminals will try to acquire details from businesses, such as the date when regular payments are due, to make their approach more convincing.

UK Finance says if you are making a payment to an account for the first time, transfer a small sum first.

Then check with the company – using known contact details – to check that the payment has been received and that the account details are correct.

“Contact your bank straight away if you think you may have fallen victim to an invoice or mandate scam,” the trade body adds.