Loophole lets fraudsters steal IDs

A loophole in the system for registering details at Companies House has allowed fraudsters to hijack the identities of businesses and illegally obtain goods and services.

Link: Financial software special

Several companies have fallen victim to the ploy over the past few weeks, according to credit card fraud specialist Early Warning.

Fraudsters use the Companies House online database to select a registered company number and address. They then submit change of address form 287 ð- after which the ‘287 scam’ is named -ð requesting the address is changed to an anonymous mailbox of their own.

Companies House automatically makes requested changes without any validation. Fraudsters can then use the company’s identity to buy goods on credit and even set up new bank accounts.

‘It’s scary because you will only find out you’ve been hit when the debt collectors demand payment for the 15,000 laptops that have been ordered in your name,’ said Andrew Goodwill, managing director of Early Warning.

Companies House is aware of the problem, but says that it cannot prevent this kind of fraud, although last month it introduced a password-protected online filing system. It said it was not a common problem, though it was taking it seriously.

The onus remains on companies to sign up for the online scheme, and few are yet aware of the scam.

News of the ploy comes amid mounting concern surrounding identity theft. The 2005 Identity Fraud Survey Report, released by the Better Business Bureau and Javelin Strategy & Research, concluded that internet-related fraud is less severe, less costly and not as widespread as previously thought, as most cases of identity theft occur offline, research has found.

The report concluded that those who access accounts online can provide earlier detection of crime than those who receive only monthly paper statements by post.

‘Our numbers show that fears about online identity fraud may be out of proportion to the relative risk, causing consumers to ignore the most glaring issues,’ said James Van Dyke, Javelin’s founder and principal analyst.

Companies House has recently stepped up its efforts to encourage businesses to file online. The cost of filing paper reports was doubled to £30, while the price of filing online was held at the original rate of £15. Observers immediately expressed concern that some companies would not have the IT infrastructure to exploit the online facilities.

Last year, Accountancy Age revealed that a ‘secure register’ system at Companies House that kept the addresses of company directors confidential, had loopholes, which put executives at risk of being tracked down by militant pressure groups.

As a result many directors have begun registering under the addresses of their accountants, lawyers or head office.