Businesses need to protect themselves against rise in bank mandate scams

Commenting on the new figures uncovered by the BBC that incidences of bank mandate fraud have risen by more than 70 per cent versus last year, David Foley, Director of Fraud Risk Services at RSM said:

‘Account switch scams or mandate scams – where fraudsters seek to fool individuals or businesses to pay invoices into ‘new’ accounts – have been around for some time but the recent rise in the incidences of this type of scam mean that businesses need to be more alert to the risk.

‘In the past, public sector organisations were more likely to be targeted - partly because of a perception that they were easier targets and partly because their transparency obligations resulted in more information about their suppliers and expenditure being placed into the public domain. However, SMEs are increasingly falling victim to this type of scam. 

‘A typical approach is where a junior member of staff in the finance department receives an email supposedly from the chief executive or another senior member of staff asking them to make an immediate payment to a supplier. This can often be on a Friday afternoon when defences are down and when staff members can be pressured into completing a payment before the end of the working week.  Other common methods are a purported supplier contacting you to notify you of a change of account details, in order that future payments can be made, resulting in payments being made to a fraudster’s account.

‘The scammers are also getting a lot more competent when it comes to creating spoof emails, meaning that fraudulent emails are becoming much more difficult to spot.

‘Businesses need to ensure they have strict controls in place, particularly when it comes to procedures involving bank account changes. Staff need to be educated about fraud risk on an ongoing basis and businesses should have a rapid response plan in place to respond to any incidences of attempted fraud. Having a step-by-step action plan can make a real difference in preventing loss and recovering monies. The sums are often significant and can have a devastating impact on businesses.’

The BBC found that more than 5,000 people were conned into sending planned payments to fraudsters' bank accounts last year. The police recorded 5,480 cases in 2015, up from 3,206 in 2014.