Discounting fraud

Over recent years factoring and invoice discounting have witnessed phenomenal growth, matched by expansion in associated fraud. In previous articles in this series (see Fraud Intelligence, February 2002 and March 2002) Bob Scott, a partner in the international law firm Hammond Suddards Edge, has looked at why the receivables financier is vulnerable, the types of fraud that invoice discounters face, the warning indicators and preventive measures. In this article he assumes the worst and considers the steps that the invoice discounter should take when a fraud is discovered.

Bob Scott CFE is a partner in the Finance Law team of Hammond Suddards Edge specialising in fraud prevention and asset recovery. He is also a Certified Fraud Examiner and sits on the Executive Committee of the UK Chapter of the Association of Certified Fraud Examiners. He can be contacted at bob.scott@hammondse.com

Discovery of the fraud

There are commonly three ways in which an invoice discounting fraud comes to light. These are: