The following article appeared on the icWales website (see web link below) and is repeated here for the information of IAF members and associated organisations.

 

http://icwales.icnetwork.co.uk/0300business/0100news/tm_objectid=15578259&method=full&siteid=50082&headline=quick-thinking-is-best-defence-against-fraud-name_page.html

 

 Quick-thinking is best defence against fraud - June 1 2005

Russell Lawson, Western Mail

HUNDREDS of examples of FSB members being targeted by fraudsters have been brought to our attention over the past few years.

 

Every month, our offices are inundated with reports of new scams _ some plain silly, some more sophisticated _ but all of them intending to con SMEs out of money.

 

Yet while there appear to be plenty of initiatives around to warn consumers of the dangers of doorstep callers and dodgy workmen, businesses are more likely to have to fend for themselves when it comes to spotting scams.

 

There is no doubt the Government has been making efforts to protect consumers. In February, the Office of Fair Trading launched Scams Awareness Month, stating that helping to spot tomorrow's scams "is the key to stopping fraudsters earning millions".

 

Joining forces with the Department of Trade and Industry, trading standards departments, Citizens' Advice, police, charities and neighbourhood watch schemes, the OFT distributed half-a-million leaflets and posters containing advice on how to recognise and avoid scams.

 

However, the FSB believes more should be done to protect SMEs falling prey to fraudsters. While the OFT now has the power to issue Stop Now Orders to those targeting individuals, a clause in the 2002 Enterprise Act excludes businesses and the self-employed.

 

The Federation is now calling for the OFT definition of consumers to be extended to include businesses and self-employed workers.

 

The aim behind Scams Awareness Month was to arm consumers with the knowledge and skills necessary to recognise and report scams - but what about small firms?

 

Fraudsters are increasingly aware that small business owners must do two full-time jobs: run their firm and also comply with ever-increasing regulations and redtape.

 

More and more scams are targeted at small businesses but the OFT is unable to use Stop Now Orders to protect them from rogue traders.

 

We are calling on the Government to extend its definition of consumer to include small firms and for the OFT to use all the powers at its disposal to protect small businesses.

 

For example, concerns are growing about malpractice in ISO 9001 certification, with some firms offering "unaccredited" versions of the quality management qualification. Various accreditation firms are offering IS09001:2000 certification at a discounted price; however, some organisations will not accept certification that is not approved by the Government's United Kingdom Accreditation Service (UKAS).

 

While UKAS believes the "vast majority" of the UK accreditation industry "does not lack integrity", it admits there is enough smoke to suggest fire and that some organisations "mix certification with the provision of consultancy in such a way as to undermine the independence of the consultancy service".

 

The problem is that some public bodies may not accept non-UKAS accredited certification, and many small businesses are not aware of this.

 

As from this month, the DTI's Companies Investigation Branch (CIB) will gain new powers, strengthening its ability to protect companies from fraud. These will enable investigators to enter business premises and stay there as long as necessary, while there will also be increased protection for anyone reporting a suspected scam.

 

Some 371 companies were wound up in the public interest in the last year, following statutory inquiries by the DTI's Companies Investigation Branch.

 

In around 10% of these cases, criminal proceedings were brought against the company concerned, with a number of directors being disqualified as a result.

 

While the CIB will clearly provide a valuable service to companies concerned they are being exposed to fraud, the DTI's Inspector of Companies says the service can only be effective if companies and their directors "play their part by supporting its efforts with their vigilance and caution".

 

They say that it is vital that company officers make a full and proper inquiry into those purchasing majority shareholdings, making loans to their companies, or if they are new suppliers.

 

They add that it is also vital to be cautious and sceptical about information on web sites or from cold-calling telesales staff.

 

 Your imagination - even suspicion - and that of your colleagues, coupled with quick thinking, can often be more effective against the scamster than any investigation conducted after the event.

 

 Russell Lawson is spokesman for the Federation of Small Businesses Wales