Small business hit by $500,000 invoice scam: ACCC issues warning

The Australian Competition and Consumer Commission is warning small businesses not to fall for an email invoice scam that swindled one small business owner out of $500,000.

The acting chair of the ACCC, Michael Schaper, told SmartCompany the consumer watchdog has received around 20 complaints about emailed invoices from scammers posing as legitimate suppliers to a small business.

Schaper says around seven small businesses have so far been duped by the scam, handing over between $10,000 and $500,000 to the scammers.

“All up around $600,000 [in losses] has been reported to us,” he says. “But they are just the businesses that have made a report to us.”

“Typically 90% of the people who report a scam to us are doing the good citizen thing, they have been approached but not fallen for the scam.

“But for a third of reports to have lost money is serious.”

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Schaper says it appears the scam has originated in North America and it is not uncommon for scammers who have some success in one territory to move on to other countries.

He is warning small businesses to closely scrutinise any email invoices requesting payment as the fake invoices in this case may still contain the legitimate supplier’s name and logo, as well as links to the supplier’s website. The only changes will be in the bank account details where the money is to be deposited and possibly in the email address the invoice is being sent from.

Schaper says in the reported cases, a small business received an invoice from what appeared to be one of its regular suppliers. But in between the supplier issuing the invoice and it landing in the inbox of the business, the invoice was taken offline by scammers and the bank account details modified. The small business subsequently paid the invoice into the wrong account and only discovered the error when the supplier contacted it to ask where the payment was.

According to Schaper, email scams targeted at small businesses are becoming more sophisticated and small businesses are more likely to fall victim.

“They are becoming harder to detect,” he says.

“In a perfect world, you would ring your client to say you have received the invoice and cross-check. But these transactions can be for international sales or online sales and they are happening at all times of the night and day.”

To guard against potential scams, Schaper recommends small businesses establish a multi-person approval process for any payments, with two or more people cross-checking payments that are made by the company.

He also recommends ensuring accounting software is as up-to-date as possible, as accounting programs can often pick up irregularities in bank account details. It is also important to update any electronic security software on company computers.

At the end of the day, Schaper says it pays to take an extra five minutes to check any invoices before they are paid.

“The temptation is to pay the invoice as soon as you get it, but just spend a few extra minutes,” he says.

Small businesses concerned about the scam can find more information on the ACCC ScamWatch website.