More than four in 10 businesses in the UK are unaware of the risks posed by invoice fraud, according to a survey by banking trade body UK Finance. Invoice finance cost firms almost £93 million in 2018.

The fraud takes place when fraudsters trick firms into transferring money by posing as legitimate payees. There were 3,280 invoice and bank mandate scam cases involving businesses over the year, with an average loss per case of more than £28,000. Invoice fraud involves criminals targeting businesses by posing as a regular supplier and making a request for their bank account details to be changed, often by email. 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.

£29.6 million of the money lost to this type of fraud was fortunately returned to business customers.

Separate research from UK Finance’s Business Payments Survey has found that over four in ten (43 per cent) businesses were unaware of the existence of invoice fraud. The survey of 1,500 firms across the UK found that:

  • Over half (55 per cent) of sole traders were aware of the threat of invoice fraud compared to two-thirds (68 per cent) of small business and over four in five (84 per cent) large businesses.
  • Smaller firms were also less likely to have experienced invoice fraud, with around one in twenty (six per cent) of sole traders having been targeted compared to one in four (26 per cent) larger firms.
  • Only one in seven (14 per cent) sole traders have taken steps to protect themselves from these kinds of scams, compared to around half (47 per cent) of small businesses and two thirds (63 per cent) of large firms.

Large businesses were more likely to have taken steps to protect themselves against such scams. But they were also more likely to have experienced invoice fraud than smaller firms.

Katy Worobec, Managing Director of economic crime at UK Finance said “Invoice fraud could happen to businesses of all sizes. 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 criminals targeting businesses by posing as a regular supplier and making a request for their bank account details to be changed, often by email. 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 regularly payments are due, to make their approach more convincing.

Key findings from Business Payments Survey

Size of business Sole trader Micro (1-9 employees) Small (10-49 employees) Medium (50-249 employees) Large (250+ employees)
Proportion aware of invoice fraud 55% 60% 68% 76% 84%
Proportion that have experienced invoice fraud 6% 9% 12% 17% 26%
Proportion that have taken steps to protect themselves 21% 43% 46% 43% 63%