New research from Tungsten Businesses has suggested that financial services firms are losing more than £165 million in invoice fraud every year.
According to the research, this amounts to £1,969 per business. Of those affected, one in five believes the fraud has cost them more than £5,000 in the last year alone.
Concern about the scale of the fraud is greater in the financial services industry than other sectors with 61% perceiving it to be the single biggest threat facing their business – more so than losing a major contract, a member of staff or competitor activities. 58% of financial services business owners are troubled by the rise in cyber-crime, compared to a national average of 54%.
Of the financial services companies surveyed, 60% have received a fraudulent or suspicious invoice in the last year; this is significantly more than any other sector and the national average of 47%. Tactics have included viruses embedded in attachments; unknown invoices attached to an email or sent by post; false changes to bank details and sending duplicate invoices.
Tungsten’s research exposes the need to crack down on fraud in the UK and is backed up by the government, which in February launched a new taskforce to combat fraud of all types. The Joint Fraud Taskforce will consist of representatives from the City of London Police, National Crime Agency, Financial Fraud Action UK, the Bank of England, and chief executives of the major banks. While focused on consumer fraud, its launch shows the scale and seriousness of the situation and the government’s desire to identify and remove weak links in the UK’s financial systems and processes, Tungsten said.
If they received a suspicious invoice, 43% would contact the police or a reporting service like Action Fraud, showing that there is still an education job to do in terms of knowing how to handle cyber-crime.
Richard Hurwitz, CEO at Tungsten, said: “Considering all the challenges firms face every day it’s telling that cyber-crime looms so large. The FS industry seems particularly attuned to the threat, which is good, but there are steps they can take to protect themselves.
“Technology such as electronic invoicing can help them battle invoice fraud as only confirmed suppliers can upload their invoices and then these are validated before they are paid, potentially saving firms thousands of pounds. Tungsten currently handles more than 15 million invoices a year, with firms in 192 countries around the world transacting across the network.”
Pauline Smith, head of Action Fraud, the UK’s national centre for reporting fraud and internet crime, added: “It is important that employees are made aware of invoice scams and are ready to recognise the signs of fraud. Incidents of invoice fraud are underreported and therefore it is difficult to know the true scale of this fraud type.
“However what we do know, is that this type of fraud prevails across all types of business and no one type of industry is immune. Those organisations that are worried they may fallen victim to fraudsters should always report to Action Fraud.”
