Many banks have recently introduced a fraud prevention measure to ensure that scammers cannot make people pay them instead of a genuine supplier.
The background
The banking change has come about due to the increase in a very simple invoice fraud. A scammer would find out, via an active marketing or PR campaign, who a company had won a contract with. They would then contact the customer often by email, pretending to be from the supplier, to advise them of a change in bank account and for any new payments to go to the new account. Little in the way of checking was done to validate the change to the bank account. Money would flow into the scammers bank account with them taking off with the funds before the supplier kicked in their usual credit control and debt chasing activities.
Scammers have such ingenuity; if only they applied it to legal activities they could lead the world!
Banking change
So what’s happened at the banks to prevent this happening?
They have introduced an account holder name checking measure which checks the name of the account holder against the name that you have entered. If there isn’t a match then the bank asks you to review the details and confirm that this is the right account and a genuine payment.
So if you expect to pay XYZ Limited but the account name shows as Mr A S Cammer then you should know that something isn’t right and not make the payment.
Business v personal bank account
That’s a brilliant fraud prevention measure that will work in many cases where the business has a bank account.
However what about the sole traders who may not have a business bank or do have a business bank account in their own name but not the name of their business.
For example, Joe Bloggs the gardener may trade as Sunny Gardens – all perfectly legal. However if Mr Bloggs quotes for a job and raises an invoice as Sunny Gardens when his customers come to pay alarm bells may ring when the bank account shown on Sunny Gardens invoice belongs to Joe Bloggs.
Trading names
For businesses operating in this way the solution is twofold:
- Operate a separate business bank account
- Have a trading name added to your business bank account
Simple solutions that will stop any query from your customers being raised during the sales and payment process. Let’s face it you just don’t want to introduce any blockers to payments!
