Fraud costing small UK companies £8bn

Small businesses in the UK are losing an average of more than £2,600 each to cases of identity theft and card fraud, research from Experian has revealed.


The survey found that 286,000 businesses had been victims to fraud during their time in business, losing a total of nearly £8billion.


Some 13% of the businesses questioned were victims of card, cheque or identity fraud although rates did vary dependent on the size of the small businesses.


SMEs with nine or more staff were most likely to have experienced fraud, occurring in 27% of cases, while just one in ten micro businesses was affected.


While fraud resulted in losses averaging £2,627 for most firms, 1% of small businesses reported losses of more than £10,000.


Companies of all sizes can become victims of fraud which highlights the need to maintain sufficient security processes when handling personal or private data.


Unplanned losses can have a massive impact on small businesses, both in financial and operational terms.


For firms without sufficient additional finance, fraud could potentially lead to business insolvency as they are unable to recover.


Two methods in particular, involving invoice fraud and phone fraud have been particularly popular with fraudsters and even resulted in Financial Fraud Action UK issuing a warning in 2014.


The latter has seen fraudsters ringing up firms before trying to trick them into revealing important payment details.


Invoice fraud meanwhile has seen firms receive fake invoices into their email inboxes, often under the guise of clients who they carry out business with.


Firms have been warned to watch out for such behaviour and to check all invoices and payments before transferring funds.


Any instances where fraudulent activity is expected should be investigated and reported to the authorities if found to exist.


Businesses offer the potential for larger scams and firms that lack the necessary security around their payment systems can get caught out.


WorldPay has even suggested that fraud could increase by as much as 80% in February as hackers look to use data harvested during the busy Christmas period.


By Phil Smith


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