Coronavirus fraud: what should business owners look out for?


Just at a time when many business owners are struggling to make ends meet, fraudsters will be working on ways to intercept grant payments, which might even involve making fraudulent applications in the organisation’s name.

What can they do to guard against this?

A sharp rise in fraud is expected and often follows periods of uncertainty and economic shocks. Scammers are adept at preying on the financial vulnerability that many businesses and individuals experience at such times and can be incredibly creative when it comes to finding new ways to access their money.

Changes to Government policy and the announcement of a new grant-based support scheme are also likely to peek the fraudsters’ interest.

In the last couple of weeks, the Chancellor has introduced a £350bn Business Support Package, providing cash payments, tax concessions and wage grants to businesses that are experiencing hardship as a result of the coronavirus pandemic. A new Job Retention Scheme, providing financial support to self-employed people, has also been announced.

The unprecedented nature and scale of this financial aid package, which involves the Government making direct payments into employers’ and individuals’ bank accounts , is bound to attract fraudsters within  the criminal fraternity, including highly-sophisticated and organised groups.

There are already signs that the fraud frenzy has begun. A trade body representing the banking and finance industry, UK Finance, is urging the public to be vigilant and is warning of an increase in ‘smishing’ scams. These scams involve sending text messages, impersonating trusted organisations, such as banks or government departments, encouraging people to divulge personal and financial information or money.

With anxiety levels raised due to the current lockdown and the impact it is having on people’s lives, we are all more vulnerable to such exploitation.

Scams that emerge at such times often offer some form of help or support. For example, business owners may be desperate to secure a cash payment, or gain access to a bank loan. Scammers may offer to help them to leverage this 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, the fraudster could make an application in their name and siphon the funds into a different bank account altogether, which the business owner is unable to access.

Such scams can feel like a personal attack, but the reality is that they are often run on an industrial scale, from call centres housing large teams of low-paid workers – so-called boiler room’ fraud.

Another type of fraud that business owners and individuals should look out for is linked to their investments. At a time when interest rates are at an all-time low and financial insecurities are high, people with money to invest could easily become a target.

They could be offered strong financial returns for fake investments in something that captures the zeitgeist, perhaps spurious biotech companies that are allegedly on the verge of discovering a new vaccine or antibody test for COVID-19. Such scams usually involve pressure selling and are cleverly presented to look like the genuine article.

Banks and the government have a role to play in protecting businesses and individuals from such opportunistic fraud. At the very least, checks should be carried out to ensure ‘agents’ acting for individuals or businesses are genuine and the public should be alerted to any new scams as they come to light.

Before paying out wage grants to businesses and self-employed people, it should also be possible for HMRC to carry out checks against their existing records to ensure they are paying the right person.

It is important for business owners and individuals to stay vigilant however and some key advice follows:

  • Check and check again – If you receive an unsolicited text message or email offering help or support in exchange for financial information about you or your business, you should perform some basic, independent checks. Check the sender’s internet history and ask for a phone number or email address so you can try contacting them.
  • Take care with online forms – If a message is encouraging you to click on a link to complete a form, make sure you are on the right page. If you’re supposed to be on a Government website for example, it should have many layers of information, so if there are only one or two pages, the site might not be genuine.
  • Be wary of new contacts – think twice before dealing with anyone who is approaching you for the first time, even those offering support or advice. It is far better to turn to trusted individuals who you have dealt with before.
  • Don’t give away your banking details – No bank should ask you to divulge this information, so if you are asked to provide it, this is probably a sign that you are being targeted by a criminal.
  • Check before you pay– If someone unknown to you asks for an upfront payment, because they can ensure that you will get a loan, they may not be genuine. Make sure you conduct the proper checks before paying in advance.
  • Look out for investment scams – If you are offered an investment opportunity that makes reference to COVID-19 and seems too good to be true, it probably is.
Gavin Cunningham is a partner and head of forensic services at accountancy firm, Menzies LLP. In a former role, he was a Principal Financial Investigator at the Serious Fraud Office.