Company identity theft

While personal identity theft is one of the UK's fastest-growing crimes, company identity theft is also on the rise. Taking a few simple steps can help protect your business, writes Georgina Harris
Company identity fraud takes place when criminals misuse a legitimate firm's identity to obtain goods or services fraudulently. Not only can this leave you to foot the bill, but your credit rating can suffer, too. And if you get dragged into a criminal investigation, you might end up having to pay legal fees to clear your name.

Key details

"Organised criminals need your company's trading history and credit rating to trick other firms into supplying goods without payment," explains Hitesh Patel, director in the forensic practice of financial advisers KPMG. "Working in gangs, they aim to steal goods they can sell on easily for cash, such as electronics and computer accessories." Patel says there tends to be an increase in this type of fraud at Christmas.

"The fraudsters start by getting hold of everyday correspondence to extract financial and official information. Business letterheads, signed letters from directors or cheque signatories, bank or credit card statements and invoices can all give away key details, such as account and card numbers or specimen signatures," he adds. And phishing, when a fraudster emails you asking you to supply your bank details online, is also on the rise.

Companies House is obliged to accept changes to its entries at face value, so once fraudsters have the information they need, they change the official registration of your business. Then they start trying to buy goods.

"A supplier who makes checks at Companies House will be shown the entry as true," Patel explains. "Credit searches reveal your genuine rating, so the order is likely to go ahead.

"If your address has been changed, the goods will be delivered to the bogus address. Because you don't see the goods, you won't be aware the fraud has taken place, but you will find out when the supplier tracks your business down at your real address and chases you for payment. By that time, the fraudster is long gone - probably having sold the goods on a market stall."

Safety measures

While types of frauds vary and are becoming more ingenious, protecting your business against fraud begins in your waste bins. Organised criminals are known to pay around £5 for each useful document retrieved from the bins of business premises.

"While no safety measures are foolproof, be careful how you dispose of wastepaper, particularly blank headed paper and financial correspondence," warns Patel. "Tear up or shred monthly statements, invoices to suppliers and signed correspondence.

Never disclose or email financial details unless you are absolutely confident you know who you're speaking to or that the website you are using is secure and legitimate."

He also advises signing up to the Companies House PROOF service - a free, secure online-filing scheme. This ensures that business information (including changes of directors and registered office) can only be filed electronically by a user with a password. Paper forms will be rejected. You can also subscribe to a service that alerts you if your company details are altered.

"And remember, you owe a duty to other directors and staff, as well as your suppliers and customers. Under the Data Protection Act, you cannot discard intact personal information, so you should be sure to shred this, too," he concludes.