Beware of online fraud

A small business that supplies hairbrushes by Royal Warrant was defrauded to the tune of £1.6 million, a mere 20 minutes after the Financial Controller was tricked into giving criminals access to the company bank account.

Steve Wright, CEO of Kent Brushes, was horrified to hear of the scam and even more astounded to find that, three months later, the business has yet to be refunded by the bank.

Speaking on Radio 4’s Money Box, Mr Wright explained that his Financial Controller (FC) had been targeted in a sophisticated authorised push payment (APP) scam in July.

The criminals called the FC and convinced him that the company’s account had been comprised and that he should move the funds. It all looked completely legitimate, so the FC logged into the bank account and made the transfers.

Unfortunately, this gave the thieves access to the Kent Brushes funds, and they swiftly made almost 40 separate transactions totalling £1.6 million, all to new payees.

Having recovered from the initial shock of the loss, Mr Wright then set about trying to get the money back, thinking that the bank would “be on hand to help us recover the money, as it happened literally moments ago.”

He contacted the bank, who told him the complaint had been logged and that they would try to recover some of the funds. He also contacted the police, who advised him to report the crime to Action Fraud but at the time of the Money Box recording, Mr Wright said there have been no arrests and there is no sign of any further investigation.

The Kent Brushes story comes on the back of a report that found only 4 per cent of fraud cases were investigated in the year to March 2023 and a call for longer prison sentences for those convicted of fraud.

Helen Gregory, Forensic Director at Milsted Langdon reiterates the advice from UK Finance which is to “Take 5” as this is salient advice to help small businesses like Kent Brushes avoid these sophisticated scams. As she explains, “Stop, Challenge, Protect” is a good mantra in instances such as the one faced by Kent Brushes.

“Forensic accountants can help businesses prevent fraud and deal with it if it happens but it will be for the banks to trace the funds with APP scams. With the proposed offence of failure to prevent fraud, the onus will be on all businesses to ensure the appropriate policies are in place to help prevent fraud from happening.

She adds: “Fraudulent transactions can be incredibly distressing for small businesses, particularly when precautions have been taken to avoid them. This case shows a finance professional falling victim to a sophisticated scheme believing it was the bank calling when it was in fact the criminals masquerading.

“We would always advise anyone who thinks that their business has been defrauded, or might be at risk of it happening, to contact us for support. We can offer professional, balanced advice based in experience and understanding of the challenges caused by misappropriated funds.”

For advice on how our forensic accounting team can help you, please contact us today.


Source: DCC Public

Posted in The Forensic Blog.