The phrase ‘perfect storm’ has become a bit of a cliché, but there’s no doubt that the COVID-19 pandemic has created ideal circumstances for a significant increase in scams, fraud, and general mischief. Confusion around controls, disrupted supply chains, reduced oversight – they all add up to a great opportunity to defraud and scam unsuspecting businesses.
According to the Fraud Advisory Panel, which works with HMRC, the Treasury and other government bodies, victims of coronavirus-related scams have lost over £11 million up until Wednesday, 8 July 2020. And given the historical tendency to under-report fraud, we can sure the real figure is considerably higher.
Some trends are already emerging from the fraud data: the use of fake companies to access government funding, knowingly fraudulent applications for the same, doctoring payrolls to grab furlough cash.
In addition, fraudsters have been using open source data to apply for stimulus funding on behalf of legitimate businesses, while synthetic IDs are being used in payroll frauds. In particular, fears over abuse of the Bounceback Loan Scheme (BBLS) are growing among those on the front line.
And while it’s impossible to cover every possible scam that the fraudsters can dream up – criminals are nothing if not motivated innovators – there are some emerging trends that business owners should be aware of as the economic confusion continues alongside the pandemic.
The National Crime Agency says some of the most common scams include:
- Shadow or fake companies are being sold on eBay which could potentially be used in bounce back loan fraud.
- A number of hacked Facebook messenger accounts are being used to ask individuals to receive money through PayPal for items sold on eBay. They are then asked to forward the money to the fraudsters’ bank account.
- Predicted opportunistic defaulters leading to a downstream of proceeds of crime and fraud offences.
- Staff leaving their jobs while working from home but retaining access to the company’s systems, data, and equipment creating opportunities for fraud.
- Impersonation of Government departments (esp. use of NHS IDs and medical supply services)
- HMRC phishing emails (esp. tax refunds, online applications for grants, and government gateways)
- Payment diversion fraud using COVID-19 as a reason for changing bank details (ie. corporate restructuring).
- The introduction of the NHS track and trace app could give rise to fraud, such as fake emails and text messages requesting people to provide personal information or individuals misusing it to cause business disruption.
- Fraudsters have been paying young adults for their personal details. They then use the information to form companies, open bank accounts, and register with HMRC.
There are, however, some basic hygiene steps you can take to protect your business:
- Reject unsolicited offers, particularly ones that offer quick fixes
- Beware of social media ads or sponsored ads online
- Don’t click on links from senders that you don’t know
- Don’t give out personal details
- Research companies that you’re looking to buy from to make sure that they’re legitimate
- Have the latest software and app updates
- Monitor your bank statements regularly for any unusual activity
Check the Financial Conduct Authority’s Financial Services Register for the name of the business that’s contacting you. To be on the extra-safe side, they have a warning list that you can check for companies that have been flagged by others.
Finally, accountants are the first line of defence in the fight against fraud, so make sure you stay in close touch with your advisers.
Paul Beare Ltd is one of the leading accountancy practices focusing on helping overseas businesses set up in the UK. So, if you’re in need of advice or support, we’re right here for all your needs, and you can contact us for help in a number of areas, from tax and payroll to accounting and banking.