Fraud - the crime that punishes small business

08/02/2016

In the week in which the Prime Minister says he wants reform of how the prison system works,  The Journal (6th Feb) reported a case of a serial fraudster who was spared jail after using a dead man’s chequebook, then walked free a second time after pulling the same trick. He had an amazing 106 previous convictions including 49 for fraud.  The fraud victims were mostly small businesses and when you lift the lid on the way fraud is reported, investigated and punished you can see that this so-called ‘victimless crime’ is likely to continue its inexorable rise.

On the last Friday in January my business was the victim of an attempted fraud and on the following Tuesday the victim of an actual fraud. My bank, HSBC, has been excellent in helping me deal with this and has reinstated my losses, but the process of engaging with the Police is woefully unfit for purpose.

Here is how it went down. On the Friday a man entered a branch of HSBC in Boston, Lincolnshire and attempted to cash a cheque for £1,000. He had a cheque that looked like an authentic Recognition PR cheque, it was printed with all my company’s information, but had a cheque number that was out of sequence. This caused an eagle-eyed bank official to question the legitimacy of the cheque. The man presented ID in the form of a driving licence. This had his picture, an address in Gateshead and a birthday that was similar to mine. The bank manager in Boston phoned me and, in accordance with sensible anti-fraud advice, I didn’t give my identifying information, to her but insisted on ringing back once I found the number of her branch. This is not easy as banks rarely publish individual bank branch numbers, so I called my bank branch and had my bank relationship manager establish the authenticity of the call. Once I had confirmed the attempt to obtain money was fraudulent the bank advised that I called the Police in Lincolnshire, which I duly did.

I explained the story and was given an incident number by a civilian official and, after being called back by a police officer, the incident was given a crime number.

A few days later my bank statement was several thousands of pounds light; another attempt at cheque fraud had happened but this time it had worked. Another counterfeit cheque had been presented in a different bank in Yeovil, this time it had been credited to another company’s account. When we contacted the other company they discovered, what they said was, an unexpected credit. A bank official warned that a scenario might take place whereby somebody rang them suggesting the business had been paid in error and ask them for a refund, which if it were made might not be refunded by the bank. The theory being that the end game of the fraud was to launder the money through an innocent third-party business.

After the second fraud I contacted Lincolnshire. Police again, thinking it would be part of the same crime incident. It was not. I was told I had to start again this time by contacting Somerset Police which looked after matters in Yeovil. I couldn’t contact my local police because the crime took place in Somerset. When I contacted Somerset Police, its website directed me to a national agency called Action Fraud. This call took a very long time, I was on the phone nearly an hour (much of it on hold). Action Fraud takes reports, these are passed for assessment to the National Fraud Intelligence Bureau and decisions on investigation are then made. So far, lots of reporting but no investigating. At least two businesses have been entirely innocent victims of this crime – the cost in my case has been met by the bank and therefore likely to be spread, in the form of the bank’s administrative costs, among all the bank’s customers.

According to the latest Annual Fraud Indicator published by the Government, identified fraud against small enterprise businesses, such as mine, amounts to £4.6billion per year. The latest crime figures demonstrate another significant fall in burglary and car crime and the overall crime figures show an 8% fall. However, the official figures don’t include cybercrime or online fraud. These are real crimes that need recording properly and treating with greater urgency. Many businesses have migrated online, and so have the criminals. It is no good if our Police forces are looking the other way when crimes are being committed; it is welcome that traditional crime is declining but policing cannot be like Woolworths or other high street retailers that were beaten by trends they didn’t spot.

In my case, the time involved in identifying the issue and reporting it was exorbitant; time that could have been spent on activity that generated on positive economic outputs. After the hours I have been spent on the phone to banks, Police and other officials, I got the feeling I was taking part in a massive crime survey and that very little would actually be done. Obviously, the Police have other serious issues to deal with; emergencies and the protection of life need to be prioritised. But fraud and theft from businesses and banks are not victimless crimes; they are a financial drain on our society diverting funds away from legitimate, dynamic and job creating uses.

The Institute of Directors has, by sheer coincidence, arranged a special event for businesses to discuss the issue of crime against businesses with our Police and Crime Commissioners. It takes place in Durham at 4.30pm on February 25th everyone in business is most welcome to come. (information from iod.northeast@iod.com ).

It only remains to say that my bank has tried hard to help me. Its staff spotted the issue, kept the evidence and when money left my account, it was replaced. It is also urgently investigating how a new cheque book that lies unused on my desk came to have duplicate cheques in circulation.

This entire episode has been a massive distraction from business, and I hope that the Home Office, Police and the banks can be as effective at tackling fraud and cyber crimes as they have in bringing down crime on our streets. Judges also need to take heed, although the Prime Minister makes a compelling case for prison reform, the fraudster who is still at liberty after been given multiple chances to go straight could, at least, be stopped from causing further financial distress if he was in jail.



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