According to the research published by Tungsten, construction firms lose £1.8bn in invoice fraud Cyber-crime costing average construction business £1,948 per year. This amounts to £1,948 per construction business.
Concern about the scale of the fraud is greater in the construction industry than any other sector, with a staggering 71% of business owners troubled by its increase, compared to a national average of 54%. They view it as the single biggest threat facing their business – more so than losing a major contract, a member of staff or competitor activities.
Of the construction companies surveyed, 60% have received a fraudulent or suspicious invoice – this is significantly more than any other sector and the national average of 47%. Tactics have included: viruses embedded in attachments; unknown invoices attached to an email or sent by post; false changes to bank details and sending duplicate invoices.
Tungsten’s research exposes the need to crack down on fraud in the UK and is backed up by the Government, who in response launched a taskforce in 2016 to combat fraud of all types. The Joint Fraud Taskforce consists of representatives from the City of London Police, National Crime Agency, Financial Fraud Action UK, the Bank of England, and chief executives of the major banks.
Worryingly, not every company is aware of the high stakes – 11% of construction businesses would take no action if they received a suspicious invoice and 6% wouldn’t know what to do. Only around half (54%) would contact the police or a reporting service like Action Fraud, showing that there is still an education job to do in terms of knowing how to handle cyber-crime.
Richard Hurwitz, CEO at Tungsten, said “Construction firms face all manner of challenges, and it’s telling that cyber crime looms as one of the biggest. It seems particularly prevalent within the construction industry possibly because many contractors have minimal back office support and therefore it is easier for fraudsters to get away with their tactics. What’s most troubling is that it needn’t be like this as there are steps companies can take to protect themselves.
“Technology such as electronic invoicing can help construction companies battle invoice fraud as only confirmed suppliers can upload their invoices and then these are validated before they are paid, potentially saving firms thousands of pounds. Tungsten currently handles more than 15 million invoices a year, with firms in 192 countries around the world transacting across the network.”
Pauline Smith, Head of Action Fraud, the UK’s national centre for reporting fraud and internet crime, said: “It is important that employees are made aware of invoice scams and are ready to recognise the signs of fraud. Incidents of invoice fraud are underreported and therefore it is difficult to know the true scale of this fraud type. However what we do know is that this type of fraud prevails across all types of business and no one type of industry is immune. Those organisations that are worried they may fallen victim to fraudsters should always report to Action Fraud.”