Debt recovery work scam warning
07 February 2019
We have been made aware of a fraud scam that masquerades as legitimate legal work.
We have been told that some firms have been approached by companies looking for help with debt recovery. They supply invoices that have yet to be paid and ask the firms to chase them down. They also quote a Companies House number for the “business” that is owed money.
When contacted, the debtors pay up using credit cards, and the firms settle with the clients. However, the credit cards used for payment are stolen and the clients disappear without paying for the work. The firm has therefore not been paid, and worse helped facilitate a crime.
Fraud investigators have told us that they doubt the company posing as the client actually trades. They also believe this has been going on for some time.
Initial reports indicate ten firms have been affected, handling “debts” totally more than £50,000. The firms come from all over England and Wales, and are of various sizes, with the smallest having seven solicitors and the largest employing 63.
The fraudsters involved are quite sophisticated and are by-passing normal due diligence processes. It is necessary to be vigilant and you might want to amend the way you operate, or ask different questions if asked to carry out work of this nature.
Changes to due diligence processes could include:
- Insisting debtors pay money directly to the firm
- Using software that checks the validity of credit cards used for payments
- Asking for a firm’s trading accounts and banking records if it asks for work of this type to be carried out
Any law firm that has been caught out in this way should bring it to the attention of the relevant authorities as it might have information that helps fraud investigations. None of the firms involved, which are not being named, are facing disciplinary action after being tricked in this way.