Small firms told to be on high alert for scams as €8m lost to fraud     

Almost 50% of small businesses reported being targeted by fraudsters in the last 12 months.

Irish firms were scammed out of €8m in 2022 due to a combination of invoice fraud and chief executive impersonation fraud, new figures from the Banking and Payments Federation of Ireland (BPFI) shows.

The BPFI said that small and medium-sized enterprises (SMEs) are particularly vulnerable to these types of scams with a recent survey conducted by the Small Firms Association (SFA) showing almost 50% of businesses reported being targeted by fraudsters in the last 12 months.

SMEs are being told to be on high alert for financial scams especially if they’ve adopted hybrid working or a work-from-home model.

Niamh Davenport, head of financial crime at the BPFI, said that most businesses would like to think they are protected against fraud but unfortunately “SMEs continue to be a key target for scammers”.

“Covid forced many businesses to adopt a hybrid work model under pressurised circumstances, which has added another layer of risk,” she said, adding that the speed of changes didn’t allow enough time to put in place sufficient security and precautions for staff.

Ms Davenport added that cybercriminals are “always looking for new ways” to defraud companies and will “take advantage of busy work schedules to create an unnecessary sense of urgency” in the hope that checks won’t be done.

Fraud awareness initiative

The figures come as part of the BPFI’s fraud awareness initiative FraudSMART. Members of the initiative include AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank.

Chief executive fraud takes place when an email purporting to be from the company’s boss is sent to the finance or payment team requesting that a payment be made to a supplier or another third party. This kind of scam is easier for people to fall victim to if working from home and the employee is unable to see their boss or check with a colleague.

Invoice redirection fraud occurs when someone claiming to be an existing supplier advises that the bank details for the payment of future invoices should be changed. These approaches can be made over the telephone, by letter, fax and by email.

FraudSMART is advising businesses to be alert to scams and focus on prevention by reviewing business security measures, taking steps to protect against scams, and ensuring that employees are up-to-date on current best practices.

On Wednesday, the BPFI and the SFA will launch a new fraud prevention guide for businesses which will outline how to avoid the most common types of financial fraud.