The data, obtained by RSM from Action Fraud, the UK’s national fraud and cyber-crime reporting centre, shows that businesses submitted over 1,500 reports about mandate fraud in 2016/17.

Mandate fraud occurs when an employee is tricked into changing a regular payment mandate such as a direct debit, standing order or bank transfer and redirecting it into a fraudster’s account.

The fraudsters can contact employees via email purporting to be from a supplier that receives regular payments. These approaches are sometimes plausible as they have correct details of staff members’ names and departments obtained as a result of phishing attacks. The scam will often only come to light when the real supplier chases for payment.

The £32.2m losses from mandate fraud accounted for 12% of all losses reported to Action Fraud by UK businesses last year.

The highest number of incidents were reported in the London Met Police force area (256), followed by Thames Valley (87) and Greater Manchester (57).

The highest losses were recorded in the West Midlands (£8.3m) followed by London (£4.4m) and Northumbria (£1.6m).

Akhlaq Ahmed, forensic partner at RSM, said: ‘These figures show that far too many businesses are falling victim to mandate fraud. While in some cases the losses are relatively small, in others they can run into hundreds of thousands of pounds, potentially putting the future viability of the business at risk.

‘Businesses must wake up to the threat of mandate fraud and take urgent action to prevent it. With the right training and controls in place, there’s no reason why these fraud attempts should be successful.’

Recommendations for actions include staff training programmes; ethical hacking exercises to test resilience to phishing attacks; verifying all requests for amended payments by checking directly with the organisation or supplier in question; and never leaving invoices or regular payment mandates on display for others to see.

Latest figures from UK Finance, which represents nearly 300 of the leading firms providing finance, banking, markets and payments-related services in or from the UK, suggest overall fraud levels are dropping.

Financial fraud losses of £366.4m in the first half of 2017 were 8% lower year-on-year. The data, which covers payment cards, remote banking and cheques, also shows that the industry prevented over £750m of fraud during the same period, or 67% of attempted fraud. This compares with £400.4m of losses and £678.7m of prevented fraud in the first half of 2016.

The group warns that fraudsters are increasingly trying to use customers’ compromised personal and financial information to carry out fraud. Details are primarily stolen through online attacks, such as data hacks and malware, as well as through impersonation scams directly targeting customers.

Report by Pat Sweet