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CCR2 Collections Technology

Trust but verify – a six-point plan to protect lenders

Technology provides many opportunities, but constant vigilance is required to avoid falling victim to fraud

Perry Burns Managing director, Working Capital Partners perry.burns@

There is no doubt that technology has made it easier to identify and prevent fraud. But it would be a mistake to think that it is only financiers who monitor advances in technology. In our experience, fraud often starts

because desperate people take desperate measures. And when they do, they use the tools with which they are familiar in their everyday, respectable life. So a ‘harmless’ e-mail overstating a debt

or with a hopelessly optimistic cashflow forecast is not seen as a crime but an attempt to buy time and preserve an otherwise sound business.

Be certain Of course, there can be no excuse for dishonesty, however nobly motivated. But financiers also have a responsibility. As Ronald Regan famously said: “Trust... but verify.” If the client knows you will always carry

out background checks, they will be far less inclined to ‘try their luck’. And if the lender offers an open, tolerant and flexible approach to financial difficulties, the client will be much more amenable to discussing problems when they arise, rather than using deception to solve their problem.

True fraudsters That is not to say though that there are not those who go out deliberately to defraud. My accounts payable team often gets e-mails, purportedly from me, asking for a transfer to be made to a new client in a hurry.


company-reporting structures, there is practically no validation of the figures submitted to Companies House. It is simple to create a company, file accounts with spectacular results and use them to obtain goods on credit. These fictional companies are often

supported with professional looking websites, complete with social media feeds, geographically consistent telephone numbers and content rich blogs. So how to validate? Trust but verify:

If the client knows you will always carry out background checks, they will be far less inclined to ‘try their luck’

l Check Google Streetview – is the image consistent with the ‘story’? l Check the directors’ social media footprints – a director of a company with a £1m profit should have more than half a dozen connections on LinkedIn. l Review bank statements – but beware of Photoshop! It is remarkably easy to mock up a genuine-looking statement. l Google the principals with the words ‘crime’, ‘fraud’, ‘prison’, ‘jail’, ‘gaol’, ‘guilty’ and ‘theft’. l Check VAT and industry registers to ensure legitimacy. l Check WHO.IS to make sure that the Nominet registration is consistent.

At first view, these look as if they have

come from me and are from what seems to be my e-mail address except for a minor spelling error in the URL. Not all frauds are opportunistic though.

It is remarkable that, although the UK has one of the most open and transparent

Conclusion Technology makes it easy for fraudsters to create an apparently trustworthy persona. But it is much harder to create a credible digital footprint, and constant vigilance is the price of avoiding technology-enabled fraud. CCR2

February 2016

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