UK construction businesses are losing more than £1.8bn from invoice fraud each year.
According to data from online invoicing firm Tungsten, shared exclusively with Construction News, businesses are losing on average £1,948 a year as a result of fraudulent invoices.
One in six construction firms in the UK believe fraud has cost them more than £5,000 in the last year alone.
Construction firms are also more likely to be targeted by fraudsters than the average business. Sixty per cent of firms surveyed received a fraudulent or suspicious invoice in the past year, compared with a national average of 47 per cent.
Although construction companies are more worried about the scale of invoice fraud – 71 per cent of firms are concerned by its increase, ahead of the national average of 54 per cent – only 11 per cent of construction businesses said they would take action if they received a suspicious invoice.
Six per cent of firms would not know what to do if a suspicious invoice was received, while just over half (54 per cent) would report the incident to the police or another service.
Tungsten chief executive Richard Hurwitz said fraudulent invoicing was “particularly prevalent” in the construction industry.
“Construction firms face all manner of challenges, and it’s telling that cyber crime looms as one of the biggest,” he said.
“It seems particularly prevalent within the construction industry, possibly because many contractors have minimal back office support and therefore it is easier for fraudsters to get away with their tactics.”
The most common tactics used by fraudsters include embedding viruses in email attachments, attaching unknown invoices to an email or via post, making false changes to bank details and sending duplicate invoices.
In February, the government launched the Joint Fraud Taskforce to tackle fraud, backed by the National Crime Agency, Financial Fraud Action, the Bank of England and major banks.
Pauline Smith, head of Action Fraud, which acts as the UK’s centre for fraud reporting and internet crime, said incidents of invoice fraud are “under-reported”, making it difficult to know “the true scale” of the problem or how it affects construction firms.
“It’s important that employees are made aware of invoice scams and are ready to recognise the signs of fraud,” she added.