Small businesses struggle to spot scams

1st December 2023

Criminals stole £42.6 million from businesses through authorised push payment (APP) fraud in the first six months of 2023 according to new data from UK Finance .

The research found that nearly one in five small business oweners (17%) participants could not always spot a scam. The data comes from results of the quiz, designed with Amazon to help businesses, particularly small and medium sized enterprises, stay safe from fraud.

Over 7,000 respondents have taken the quiz since it launched last year. Recreating a busy office environment, it takes users through a series of potentially fraudulent situations. he results show that some types of scams, such as impersonation scams (where a criminal pretends to be a trusted organisation or person), were front of mind. However, procurement scams (where you are deceived into appointing a new supplier without going through normal procurement processes, resulting in financial loss) were harder to spot. One in ten people who took the quiz weren’t able to recognise a procurement scam.

The data follows recent figures from UK Finance revealing that criminals stole £42.6 million from businesses through such scams known as authorised push payment (APP) fraud in the first six months of 2023. This is where the fraudster tricks their victim into sending money directly from their account to one which the criminal controls.

Businesses are often a target for criminals as their accounts generally hold more money than the average consumer. Small and medium sized enterprises (SMEs) can be more at risk than other businesses as they may have fewer protective measures to detect fraud and less regular training on the issue.

Other common ways criminals target businesses are through CEO scams and invoice and mandate scams. Invoice and mandate scams occur when criminals pose as regular suppliers and convince you to change their existing bank account details. In a CEO scam, criminals impersonate your boss or a senior manager to convince you to make an urgent payment outside of your business’s internal procedure.

Paul Maskall, Fraud and Cybercrime Prevention Manager at the Dedicated Card and Payment Crime Unit said “We can see that businesses are increasingly alive to scams. But criminals are also increasingly sophisticated in targeting them. It’s imperative that businesses keep their guard up. We’re encouraging SMEs to reflect on their internal training, culture and policies, and to follow the advice of the Take Five to Stop Fraud campaign: take a moment to stop and think as it could keep your business safe.”

David Raw, Managing Director, Commercial Finance at UK Finance said “Fraud can be devastating for firms – especially small businesses, the lifeblood of the UK economy. As criminals develop more and more complex ways to break through businesses’ defences, many smaller firms often just don’t have the same security resources as their bigger counterparts. That means they need to be hyper-vigilant.”