Construction recruitment fraud in the factoring industry

Construction recruitment fraud in the factoring industry seems to one of the growing problems within the the invoice finance world.

I had enquiries from two recruitment companies in quick succession towards the end of last year that were fairly obviously set up to deliberately defraud factoring companies and another over the weekend which is why I thought it time to put pen to paper.

What worries me is that some factors (including bank owned factoring companies) are so lax in their due diligence that they take on these fairly obvious fraudsters and end up losing money with sums in excess of £1m being lost by at least one bank owned factoring company and others being caught for lesser sums.

brokers try and punt these fraudulent deals around the market placeA further concern is that brokers try and punt these fraudulent deals around the market place either because they aren’t bright enough to spot an obvious bad un or else because they couldn’t care less if they can earn out of it.

The first of my enquiries telephoned to ask me to source a factoring deal for them. According to the caller they were a fairly new company but had £1m of orders for construction industry workers if they could obtain the funding.

I suggested one particular factoring company that would have been ideal for them but he told me not to contact them as he had already spoken to them. When I suggested that if I spoke to them he would probably get a better rate he was fairly insistent that he would deal with that company himself.

Comments like that tend to set my spidey senses tingling and it didn’t take long for me to find that a company in the same line of business run by a director with the same surname had gone into Administration owing a large sum to the factoring company that he didn’t want me to contact. What made it worse was that the director had been banned from running any more companies such had been his previous behaviour.

My most recent example of this type of company came via a contact form on my website so I had time to research the company before speaking to them.

The first oddity on the contact form was that the email address from the contact was from an Outlook address and not as one would expect from a company email address. When a contact form includes a link to a website it is natural to have a look at it but this time the website didn’t exist and according to Whois the domain hadn’t even been registered.

Like many contact forms it records the IP address and this one was in Oman.

Thumbs Down from Factoring BlogAccording to Companies House the company was registered in November 2019 and the first year’s accounts were filed just five weeks after the year end.

It was a most unusual set of accounts as it showed fixed assets of £1,813,000 debtors of £313,000, cash at bank of £411,430 and no creditors at all.

Although I said that I had time to research the company before speaking to them I didn’t actually bother to contact them at all as I value my reputation for integrity and in my 22 years as a factoring broker I have never once put forward any deal that I thought was wrong although there have been one or two that turned out to be fraudsters.

A dozen or more years ago I had a fairly new start telecoms company accepted and I went on holiday to lie in the sun dreaming how I was going to spend the £16,000 commission that I had invoiced before I left only to return to find the whole thing was a fraud but that’s another story

EDIT – Just five minutes after uploading this blog I received a phone call from the latest fraudster and told her that I didn’t want to deal with her enquiry to which she just replied “OK”

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