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Fraud awareness month: Invoice fraud

November 7, 2019

This month is fraud awareness month which promotes openness and honesty about fraud. It also aims to raise awareness and share good practice in tackling fraud and financial crime.

What is Invoice fraud?

Invoice fraud is when fake invoices are sent to targeted organisations to extract money by exploiting vulnerabilities in their accounts payable processes.

As a lot of public sector information is openly available online and elsewhere, fraudsters are usually aware of the relationship details between the organisation and supplier. They are aware of payment dates/payment amounts and pose as suppliers when contacting finance teams to change genuine supplier account details.

Types of Invoice fraud:

Insider fraud – this is when there is someone on the inside who has access to NHS organisations payments or where the individual can influence the outcomes of an organisation’s processes. Examples include: false payment requests; overbilling of debtors or creating overpayments and pocketing the difference/ subsequent refunds; and creating bogus suppliers for fraudulent payments.

Mandate fraud – this is also variously described as ‘change of bank account scams’, ‘payment diversion fraud’ or ‘supplier account takeover fraud’. This type of fraud occurs when someone gets an organisation to change a direct debit, standing order or bank transfer mandate, by purporting to be from a supplier they make regular payments to in order to benefit from unauthorised payments. The details of suppliers are obtained from a range of sources including corrupt staff, publicly announced contracts and on-line logs of supplier contracts.

Supplier fraud – this is when steps have been deliberately taken by a supplier to mislead a health body with a view of obtaining payments that were not properly due. Duplicate invoices; hidden or incorrect fees, such as ‘handling fees’, ‘on-costs’ and ‘administration fees’; and charging or VAT, without holding a VAT registration number, are just a few examples. Health bodies can also be targeted by bogus publishers, who provide invoices for adverts in publications that do not exist.

What action should you take to reduce the risk of falling victim to this fraud?

  • Checking information on invoices against the supplier details held on the system. Verify that goods have been ordered and received before making any payments. Purchase orders, booking confirmations and good received notes should be reconciled to invoices.
  • Where any changes to supplier data is requested, contact should be made with the (real) supplier using original contact details to confirm the changes being requested.
  • Setting the right anti-fraud culture within the health body is vital in preventing fraud and corruption. Ensure those involved with the process of payments comply with the organisation’s Standing Financial Instructions, Standards of Business Conduct and counter fraud and anti-bribery policies.
  • Colleagues should also watch this short video produced by NHS Counter Fraud Authority.

If you require any further information regarding fraud or bribery within the NHS, please contact the organisation’s Local Counter Fraud Specialist (LCFS).

Thank you for supporting this important initiative. NHS Fraud: Spot it, Report it, Together we stop it.