Corporate Identity Fraud on Companies House

21 September 2011 DueDil Team

Many people have fallen victim to Corporate Identity Fraud, and between 50-100 cases occur each and every month in the UK. The term “Corporate Identity Fraud” is commonly used to describe the impersonation of another organisation for financial or commercial gain.

Corporate fraudsters set up a false company to trade or steal your organisation’s identity and/or financial information and use it to purchase goods and services, obtain information or to access facilities in your organisation’s name. Companies House is an executive agency of the Department of Business, Innovation and Skills (BIS).

The function of Companies House is to receive, store and disseminate information from Limited Companies, Company Directors, and certain other bodies. Unfortunately Companies House does not have any specific investigatory powers, and as such, is only able to advise on issues relating to fraudulently filed statutory documents that are sent to them.

Types of Corporate Identity Fraud

The more common types of business identity fraud include company impersonation and company hijacking. Companies House are used by fraudsters as a vehicle to achieve this by submitting documents to change the address of your business and/or appoint ‘rogue’ directors in an effort to purchase services and goods on credit.

Fraudsters have success doing this by reactivating a dormant supplier account you previously had, in which the supplier is never paid for the goods or services they supply. Company impersonation is achieved when a fraudster conveys themselves to your suppliers and customers as if they are you. They are then tricked in to providing sensitive and personal information about you, which is used against you, and to deliberately defraud your customers and suppliers.

Some ways in which your company can be impersonated is through setting up similar, if not identical looking websites with a slightly different domain name (maybe a .net instead of .co.uk), using those domains to send false e-mails. Then utilising your company logo, they can create bogus invoices using your newly created “change of address”.

What are the consequences to my company?

Depending on the type of criminal attacking your company, you could sustain small business losses which you become aware of fairly quickly, or in the case of organised criminals, you could be subject to much larger losses and damage to your business that is harder to recover from and takes much longer before you realise you have been defrauded. Let’s look at the following two potential scenarios:

Example 1

On the lower end of the scale, and let’s just say you are in the building/construction business, you could have supplies delivered to a job site unbeknownst to you, to the tune of at least £20,000, and within minutes those supplies will be taken away in a criminal’s lorry and used on another jobsite and/or sold to someone else.

Bear in mind that if they have convinced your suppliers they are you, and are successful with the first criminal act, then they could repeat the same process for at least 30 days or so, or until you become aware from your supplier that these bills have not been paid, or you realise that the delivery addresses have nothing to do with your company or any jobs you have in progress.

Example 2

Organised criminals can take corporate identity theft to a whole new level. Using the deceptive methods previously mentioned, and once they have been successful impersonating your company, it would not be that difficult to obtain a loan in your company name, apply and receive a corporate credit card, and even obtain access to company bank accounts!

It doesn’t bear thinking about the monetary damage this could do to your company which could easily exceed tens of thousands of pounds. Just imagine if a loan or credit card was taken out in your company name, the bills and statements are going to a different address set up by the fraudsters, and you may not even find any of this out for at least 60-90 days!

What should you do if you are a victim of fraud?

If you suspect you have been a victim of corporate identity fraud then you can contact Companies House as long as it directly relates to fraudulently filed statutory documents sent to Companies House, such as:

  • Registered Office addresses changed without company approval
  • Individuals being appointed as an officer of company without their knowledge or consent
  • Company names being changed without permission
  • Invalid addresses being used for a company’s registered office and/or as an address for a company officer
  • Internal Disputes between company officers involving the filing of invalid documents

You must ensure you provide them with full details of your complaint, including your contact details. Any allegations of fraud relating to the filing of the above mentioned documents should also be reported to the police as they are the appropriate authority to deal with such matters.

In our next blog post relating to corporate identity fraud we will be highlighting what precautions you can take as a company to help prevent it, some do’s and don’ts, and other useful resources to help protect your business.

Has your business ever been defrauded? Have you had any near misses, and maybe detected something suspicious before if became an issue and cost your company money? We would love to hear from you in the comments section, so your advice can help others.