UK Finance warns SMEs over increased targeted scams risk

Criminals often attempt to impersonate a CEO, a senior manager or a supplier to try and convince members of staff to make an urgent payment or to change the existing bank account details held on file. These scams result in the victim transferring money to a criminal. Indeed, UK Finance’s collated figures showed that, in the first half of 2021, businesses saw £59.2 million lost to these frauds. That represents an increase of 35%.

In a survey conducted for the ‘Take Five to Stop Fraud’ campaign, 80% of SMEs said they had received an unsolicited text or e-mail request for money and personal information, while 64% had received unsolicited phone calls.

The survey also found that, although 62% of SMEs claim to be more aware of fraud since the start of the pandemic, a concerning one-in-six (16%) didn’t challenge an unsolicited phone call requesting money or personal information.

Basis of the campaign

The ‘Take Five to Stop Fraud’ campaign urges businesses to remember that criminals are experts at impersonating people, organisations and the police. Stopping to think could protect individuals and companies as a whole.

STOP: If you receive a request to make an urgent payment, change supplier bank details or provide financial information, take a moment to stop and think

CHALLENGE: Could it be fake? Verify all payments and supplier details directly with the company on a known phone number or in person first

PROTECT: Contact your business’ bank immediately if you think you’ve been scammed and report it to Action Fraud

Katy Worobec, managing director of economic crime at UK Finance, said:  “Criminals are continually becoming more sophisticated and are experts at impersonating people and suppliers. As we start the New Year, businesses should make it a priority to be wary of any unexpected contact requesting an urgent payment and to be careful with the type of information they share online about the company. The banking industry is tackling fraud on every front, but it’s important for businesses to always stay alert and, when in doubt, remember the advice of the ‘Take Five to Stop Fraud’ campaign.”

Liz Barclay, the Small Business Commissioner, added: “Data shows that scams are on the rise and businesses are having to grapple with the fall-out. Suffering losses because of fraud can leave a company’s finances in ruin. Imagine that a supplier e-mails you, saying that they need urgent payment to new bank details. It would be very easy to become sucked in by an e-mail which looks genuine when you’re in a rush. Please, please take nothing at face value and check with anyone you need to pay before responding to texts, e-mails or calls. We need to make it impossible for the scammers to scam us.”

Serious issue

Martin McTague, national vice-chair for policy and advocacy at the Federation of Small Businesses, explained: “Business crime is a serious issue for small firms right across the country, with fraud being one of the key problems at hand and one that has only been accelerated due to the increase in online trading and e-commerce during the pandemic.”

McTague added: “Small businesses face almost four million cases of cyber crime each year, predominantly focused on malware and fraudulent payments, so the need for vigilance has never been more important. The ‘Take Five to Stop Fraud’ campaign is a crucial one for highlighting the issues related to these crimes, and reminding all businesses that no-one is immune from attack. Criminals are nimble, agile and using more creative and sophisticated ways of targeting their victims, and that requires a similarly nimble set of defences in return. Only by raising awareness of these sorts of fraud cases will we stand a chance of protecting small businesses for the future.”

Data collected by Barclays has shown that, between January and October 2021, the sectors reporting the most cases of SME scams were property and construction (24%), retail and wholesale (18%), business services (15%) and manufacturing and transportation (12%).

Common scams

Common scams targeting business include the CEO scam. Criminals will impersonate a boss or a senior manager to convince staff to make an urgent payment outside of their business’ internal procedures. Sometimes they gain access to a business’ e-mail account by hacking or use spoofing software to e-mail a member of the finance team with what appears to be a genuine e-mail from their boss or a senior manager.

There are also invoice and mandate scams. Here, criminals pose as regular suppliers and convince the business to change its existing bank account details on file. The company is then tricked into sending money to the account which is controlled by a criminal rather than the genuine supplier.

A woman in Kent saved her employer half a million Euros by cleverly identifying a fraudulent e-mail. Just a few months into a new role within the Accounts Payable Department at a UK-based manufacturing company, the woman received an e-mail claiming to be from a long-standing company supplier saying that they had changed their bank details. She challenged the change, flagging it to her managing director. It was a scam.  

Hundreds of millions of pounds’ worth of fraud and scams have been prevented through industry initiatives such as the specialist police unit (ie the Dedicated Card and Payment Crime Unit), which is fully funded by the banking and finance industry. The industry also works with text message providers and law enforcement authorities alike to block scam text messages, and also with Ofcom to crack down on number spoofing.