Ring a Ding-Dong – Telephone scams ring wrong numbers for business owners and private organisations?

Channel 4 reported some months ago that international fraudsters are targeting UK businesses with a highly lucrative telephone hacking scam.

This criminal enterprise, run by overseas hackers, uses widely available sophisticated software to infiltrate an organisation’s phone exchange. The software enables them to identify the pass code for any telephone exchange. Often the hackers do not even need to use sophisticated software as many businesses have failed to change the default pass code provided by the supplier of their telephone exchange, these pass codes are familiar to these crooks.

Another tactic used is to simply locate an out of use phone extension and get access to the phone’s voicemail. Most phone systems allow users to dial into their voicemail and then to make work calls while out of the office. Once they’ve hacked into the voicemail, the criminals program the phone to dial an international premium rate number (IPRN). Of course, they own this number and every time it’s dialled the money goes straight into their pocket. With calls costing anywhere up to £10, this can generate substantial amounts of cash.

Target is mainly large organisations

Public bodies such as councils have a large telephone exchange and consequently a large number of phone lines. An example of this was Hambleton District Council in North Yorkshire, who ran up a £30,000 bill from hundreds of unauthorised calls to countries like Ethiopia, Bosnia and Pakistan. Despite the criminality the council was obliged to pay the bill and this means of course that they are short of funds for other services.

Our view is that all business organisations should (as part of their risk assessment of the business) regularly change the pass code into their telephone exchange on a regular basis, or at the very least change the pass code from the default. They may also wish to re-negotiate their contract so that premium rate numbers are excluded by the service provider.

 Another telephone scam targets smaller companies

Every week, businesses are contacted by companies offering advertising space for sale in publications. Most of these companies are genuine, and provide a valuable service. However, there are some rogue companies that use dubious methods to make a significant profit. They do this by duping legitimate businesses into placing advertisements in publications that turn out to be either non-existent or not as described.

Typically, such companies target business owners offering to sell advertising space in publications such as diaries and wall-planners. Often, these companies pose as registered charities or claim that a percentage of the publication’s revenue will be donated to charity – usually a children’s or cancer charity. Many businesses agree to place an advertisement, in the mistaken belief that most of the proceeds will be donated, when in reality any donation is minimal.

The circulation of the publication may prove significantly less than claimed in the sales pitch. So while a publication may be produced, there may be little commercial benefit to the business.

Another tactic involves researching publications in which a business may have advertised before. The scammer will then contact the business posing as the publication’s advertising agency. If during the course of the telephone call the business indicates an interest in placing an ad, they are transferred to another telephone operator. At this stage, the telephone conversation is recorded and the rogue company claims this as ‘evidence’ of an agreement to enter into contract, pressuring businesses into payment.

These rogue advertising businesses may even send you an invoice for advertising services supposedly provided months earlier. Many businesses pay these invoices, in the mistaken belief that they have simply forgotten that they placed the advertisement. In cases where they don’t pay, businesses will have endless phone calls and letters until they relent and make payment.

Many businesses have admitted paying such invoices, simply to end the unwanted calls and letter demands. However, such a move is counter-productive as it marks them as an easy target to these parasites and ripe for a repeat performance.

Our view

It is important for any business to have financial controls in place. We have covered in a previous blog the need for a purchase order book for recording all purchases and for identifying which employee may place orders and up to what level (see also our forthcoming blog on director’s responsibilities). This provides valuable control and prevents misunderstanding or potential loss of money when a rogue invoice arrives.

Ray Best can help you protect your financial future. To find out more, simply click here!

About Ray L Best

Ray Best has had over 30 years experience of advising on complex financial matters. A published author of a number of books including “Partnership and Shareholder Protection”, Inheritance Tax Simplified”. We provide an initial meeting at no cost and only engage with clients when we can add significant value.

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