COVID-19 fraud: what should you be on the look out for?

Gavin Cunningham - Forensic Accounting Partner Menzies LLP

Gavin Cunningham – Forensic Partner
DD: +44 (0)20 7465 1984

With many businesses struggling to make ends meet, business owners are even more likely to become the target of fraudsters as they seek to intercept lucrative grant payments. So what can businesses and individuals do to guard against this and the additional threat of fraudulent applications being made in their name?

When periods of economic uncertainly and shocks occur, there is often a sharp rise in fraud and scammers have become very adept at preying on financial vulnerability. Therefore, businesses and individuals must be wise to the incredibly creative methods scammers will use to find new ways to access their money. This is especially significant following recent Government policy changes and the announcement of new grant-based support schemes.

Over the last few weeks, Chancellor Rishi Sunak has announced a series of schemes to support businesses who are facing hardship including a £350bn Business Support Package, cash payments, tax concessions and wage grants. Add to this a new Job Retention Scheme, which aims to provide financial support to the self-employed, then the lure of all these being paid directly into employers’ and individuals’ bank accounts means fraudsters (including highly-sophisticated and organised groups) are bound to be on alert.

Smishing – the latest scam trend

Arrow on a target icon

UK Finance – a trade body who represents the banking and finance sector – suggests that the fraud frenzy is already well under way and has urged the public to be vigilant of the growing number of scams including ‘smishing’.

What are ‘smishing’ scams?

These involve sending text messages which impersonate trusted organisations, e.g. banks or government departments, to encourage people to share money or personal and financial information.

Scams that emerge are likely to offer help or much-needed financial support in exchange for an upfront cash payment. Once the business owner has signed up to the scam and shared sensitive information, a fraudster can begin making applications in their name and siphon the resulting funds into a different bank account, which is not accessible to the business owner. These scams can feel like a personal attack, but are more often than not run on an industrial scale by low paid workers from large call centres – this is often referred to as ‘boiler room’ fraud.

Investment and other opportunistic fraud

business growth on laptop graphic

With interest rates at an all-time low and financial insecurities at an all-time high, people with money to invest are also likely to become targets. The offer of strong financial returns for fake investments e.g. spurious biotech companies that are about to discover a new vaccine or antibody test for COVID-19, can be extremely attractive to both individuals and business owners thanks to high pressure selling and clever presentations to make the offer look like the genuine article. Both banks and the government have a role to play when it comes to protecting businesses and individuals from such opportunistic fraud. At a minimum, checks should be carried out to ensure ‘agents’ acting for individuals or businesses are genuine and alerts to any new scams should be publicised as they come to light. It should also be possible for HMRC to carry out checks against their existing records to ensure they are paying the right person.

Six ways for business owners and individuals to stay vigilant

number 1

Check and check again

If you receive an unsolicited text message or email offering help or support in exchange for financial information be sure to perform some simple, independent checks. Check the sender’s internet history and ask for a phone number/email address so you can try contacting them directly.

number 2

Take care with online forms

If a message encourages you to click on a link to complete a form, don’t click on the link unless you are confident it is genuine instead navigate to the page via your browser. For example, if you are directed to a Government website, it should have many layers of information; if there are only one or two pages, the site may not be genuine.

number 3

Be wary of new contacts

Always think twice before dealing with anyone who is approaching you for the first time. It is far better to turn to trusted individuals who you have dealt with before.

number 4

Don’t give away your bank details

Always think twice before sharing your bank details with anyone you have not dealt with previously. It is far better to turn to trusted individuals who you have dealt with before.

number 5

Check before you pay

If someone unknown to you requests an upfront payment, e.g. to secure a loan, they may not be genuine. Be sure you conduct the proper checks before paying in advance.

number 6

Look out for investment scams

If you are offered an investment opportunity that makes specific reference to COVID-19 and it seems too good to be true, it probably is.

In addition to the fraud risks associated with loans and investment opportunities, as businesses reopen then we are likely to see frauds targeted at the supply chain. Most businesses will need to obtain PPE or other equipment to enable social distancing in the workplace. Some businesses may need to source alternative suppliers of stocks and raw materials as their historical suppliers may not have reopened or be able to cope with orders. In such circumstances unsolicited offers to supply products will be received and completely bogus web sites offering such supplies will spring up. Businesses will need to carry out basic checks on these new suppliers to be satisfied as to their identity and ability to deliver the right goods; if they do not then they risk paying for supplies that do not turn up. Be especially wary if they ask for substantial up front payments and if the banking details do not match to the supplier names, or where the bank is situated in another jurisdiction to the supplier.  

For more information on how to avoid becoming a victim of fraud during the COVID-19 crisis or to speak to someone about one of the issues highlighted, contact Menzies Forensic team.

Posted in Blog, Healthcare, Hospitality & leisure, Manufacturing, Not-for-profit, Property & construction, Retail, Technology, Transport & logistics, Recruitment, Legal, Financial Services