We would like to make you aware of an emerging and potentially serious fraud risk amongst local authorities and housing associations that has recently come to our attention.
Many organisations have been targeted with a new type of potentially substantial fraud, ‘creditor fraud’. In particular, we have been notified of cases where fraudsters are targeting local authorities based on the publication of ‘creditors and spend’ on council websites. The fraudster adopts the identity of the supplier and writes to the local authority with notification of a change in bank details. Some local authorities have taken this at face value, made amendments to their payment system and then made payments unwittingly to the fraudster’s bank account.
This is a typical scam that a number of organisations and other public service organisations have fallen victim to, with one organisation recently suffering a very substantial loss. To date, fraudsters have been using the following construction companies in the initial contact letters:
- Mansell Construction
- May Gurney
- Skanska
- Willmott Dixon
- Bam Nuttell
However, it is important to beware that tactics will evolve and the fraudsters will endeavour to choose suppliers who have not been highlighted. The following advice will assist with the prevention of this particular type of fraud:
- This particular type of scam targets established business relationships in order to avoid vetting and will normally involve an amendment to existing payment arrangements
- Closely scrutinise all requests for changes in payment details, no matter how minor
- The criminals are targeting large creditors; this is possibly as a result of tender documents or publicised creditor lists – make creditor teams particularly aware of this
- Circulate a warning to all staff with access to financial systems to not provide creditor reference information via the phone with previously unknown individuals
Ensure that as part of your standard procedures all creditors are contacted to verify any change of bank details, or other contact details. Beware that the fraudsters will use false contact details in the letter supplied to make the changes, so that any queries are answered by the fraudster. Therefore, it is essential to establish correct contact details for the creditor by using either:
- Existing contact details held on file, or
- Directory enquiries , or
- Details obtained via an Internet search of the company name
Designated Contact Details
To speak with a Zurich Municipal fraud specialist, please contact Steven Jackson, Zurich National Fraud Controller steven.jackson@uk.zurich.com
In addition, if you receive a fraud letter, please email Jeremy Frost, NAFN Intelligence Manager, immediately as NAFN is currently dealing with the Police who are looking to restrain any bank accounts detailed in the correspondence.
Jeremy Frost, NAFN Intelligence Manager, Jeremy.frost@nafn.gov.uk
Useful Websites
National Anti-Fraud Network – www.nafn.gov.uk
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