Finance departments at West Midlands firms are being warned to watch out for a rise in supplier fraud.

The Birmingham offices of KPMG have seen an increase in the number of clients receiving official looking letters purporting to be from one of their suppliers.

The letters ask organisations to amend that supplier’s bank account details, but the reality is that the letters are not coming from their suppliers, but rather fraudsters.

Anoushka Akins, senior manager within KPMG’s Forensic team in Birmingham, said: “This is a troubling rise in what basically is an old style fraud.

"Often many businesses who have amended a supplier’s details do not realise there is a problem until they are chased for payment by that supplier. A number of well known organisations have been tricked in this way, with the amounts involved being significant.”

The fraud works by a company receiving an official looking letter on company letterhead advising of a change in banking arrangements for one of their suppliers.

It states that all future payments should be settled to a new bank account and those details are shown in the letter. The hope is that the organisation then updates their files and subsequent payments are made to this account.

There are a number of simple steps that businesses can take to prevent this type of payment fraud:

- Any correspondence purporting to change a supplier’s bank details should be confirmed with a trusted contact at the supplier

- Alert clients/suppliers and contacts to the risk of this particular scam

- Where an outsourced or off-shore accounting or back office function is involved, ensure they are made aware of the risk and have the necessary controls in place

- Be wary of providing details of suppliers, clients or business partners to unknown individuals

- Supplier data should not be provided by telephone unless the person calling can be identified as a genuine caller

- Access to supplier data such as supplier codes should be restricted to those individuals who need to access this information in order to perform their duties

- Consider the location of the bank to which it is proposed that future payments are to be made and assess whether it seems appropriate.