West Midlands contractor Speller Metcalfe is urging the rest of the industry to be on the alert for fraudsters setting up fake bank accounts to divert thousands of pounds of legitimate payments, after it was targeted in two recent scams.
The main contractor was alerted to two incidents of creditor fraud, also known as mandate fraud, after clients were contacted by a firm claiming to be Speller Metcalfe, to advise that its bank details had changed.
The bogus firms requested that payments, worth thousands of pounds, were made into “new” accounts, but fortunately in both cases the fraudulent activity was identified before any money was exchanged. Speller is now keen to get the message out before another contractor is less fortunate. It is also aware of another external partner that was subject to the same scam.
Speller Metcalfe believes the criminals took information from its websites to gain access to confidential information including the client’s name, the project scheme, its company logo and contact details. Its finance director was also named as the sender using a forged signature.
One of Speller’s clients was contacted by letter, the second by email. The clients were based in separate regions, in Cheltenham and Birmingham.
The letter received by the Cheltenham client pre-dated the second incident by a few months, and contained some errors, but was considered genuine by the client, which changed its bank details to those of the fraudulent request and was about to pay out.
“In practice, companies do not often change bank accounts, and therefore if you receive such a notification, however genuine it may appear, always get specific confirmation from a current director of the receiving party that you are authorised to pay into the new account.”
It was only when Speller chased payment and the client repeated the new bank details that the fraud was identified.
In the second incident, a much more professional letter attached to an email was received by the Birmingham-based client. It included a fake letterhead, professional tone and forged signature. Follow-up phone calls were even made to make sure the client had received the letter and to confirm the change of account details.
Luckily for Speller Metcalfe, a sharp-minded purchase ledger clerk working for the client flagged up an error in the letterhead address with his finance director just before the exchange of a significant sum. The director then called the contractor’s accounts team to confirm its existing details, no money was lost and the incident is now being investigated by the police.
By raising awareness, the industry can help prevent others from falling into the easy trap of mandate fraud, says Andrew James, partner and head of construction and engineering at solicitors Harrison Clark Rickerbys.
“Unfortunately this type of fraud and also more sophisticated cybercrime is on the increase, and clients and contractors need to be vigilant.
“For the paying party this can be a real issue because it can still remain liable to pay the original debt, and effectively it could have to pay twice in the knowledge that it will face a difficult claim against the fraudsters.
“In practice, companies do not often change bank accounts, and therefore if you receive such a notification, however genuine it may appear, always get specific confirmation from a current director of the receiving party – preferably both by telephone and in writing – that you are authorised to pay into the new account.
“Also review your accounts procedures and consider if you have appropriate checks and balances in place to avoid this and other types of fraud; for example separating out authorisation and payment functions, levels of authority to make payments etc. In the light of this scam, consider putting restrictions on how and when payment details can be changed and who is authorised to do this.”
