Most businesses don't even know they're a victim of fraud

Published on 27 February 2007

More than half of UK businesses have lost money because of fraud, yet nearly a third of firms admit they have no mechanisms in place to spot when they are being swindled.

A poll of credit professionals carried out by the Credit Show found that more than two out of five companies said they have been defrauded by customers, while over a quarter of those have suffered fraud at the hands of their own employees. In addition 17 per cent of firms said they have been affected by fraud from a third party, while nine per cent have been defrauded by their suppliers. One in twenty companies say they have lost over £1m a year due to fraud.

Although nearly half of the companies polled were confident they have not been hit by fraud, a third admitted they do not have anything in place to spot potential fraud, while 20 per cent wait for their annual audits to reveal any problems. In fact more than a third say they would not know how to spot the signs of fraud.

Kelly Stanley, a spokesperson for the Credit Show, commented: "It seems that the majority of UK companies suffer from at least some low-level fraud, but the most worrying thing is the large number of businesses with little or no measures in place to spot fraud. Six per cent admit they 'turned a blind eye' to fraud, with half believing that the crime was either too small, or too expensive, to prosecute."

How to develop an anti-fraud strategy:

• Identify the vulnerable parts of your business, whether it is stock or your finances, and develop a strategy to protect them;
• Carry out regular and random audits to insure the books balance or that stock has not gone missing;
• Always double check credentials of customers, suppliers and third parties with credit checking agency before extending them credit;
• Implement good security procedures, both in terms of physical protection, but also administrative measures. For example, make sure your IT systems are password protected and restrict physical access by non-employees to sensitive or valuable areas of your premises;
• Contact your accountant or a specialist to find out more about spotting fraud;
• Visit the Metropolitan Police Fraud Alert Website for news, information and advice for tackling business fraud.