The best business advice, opinion, news and expertise in Greater Manchester and further afield.

Friday, 8 March 2013

Friday Guest Blog: Simple Precautions to Reduce the risk of Business Diversion Scams

By Gary Duffy, Commercial Litigation Solicitor at Brabners Chaffe Street

Businesses are falling victim to a number of payment diversion scams involving often significant losses.  Fraudsters are using a variety of such scams but businesses can reduce the risks by taking some simple precautions.

The scams depend on businesses assuming that those contacting them are trustworthy.  Businesses might be contacted, most often by letter, fax or email, by what appears to be a long standing and trusted supplier or contractor requesting that future payments be made to a different bank account.  Having carried out the change, the business will be contacted by the genuine supplier or contractor wondering where their payment is.  

It is at that point that the business might notice that the email from its 'supplier' came from a slightly different (but, on quick inspection, almost identical) email address or that the letterhead of its 'contractor' is very slightly different from other letters that the business has received previously.  By this stage, it will likely be too late to cancel the payment and the fraudster will have disappeared, leaving the business out of pocket and still liable to pay its genuine supplier or contractor.

Simple precautions such as the following can reduce the risk of falling victim to such scams:
  • Be vigilant - treat any request to change payment recipient details with caution.
  • Double check - call back the supplier using proven details held in your own system. 
  • Designated person - establish a procedure and identify a limited number of people internally and with suppliers who are authorised to change payment recipient details.
  • Information security - exercise caution in providing details of contracts and accounts.