Fraud alert: Covid-19 business grants
2 June 2020
Beware of the latest Covid business grants fraud, where scammers email councils requesting information about businesses. It’s been confirmed these were sent by fraudsters, pretending to be senior officers from well-known businesses, so that they can apply for a Covid-19 grant.
In some cases, the local authority received an email claiming to be from a well-known business. Examples seen by our counter fraud team include pubs, coffee shop chains, pharmacies and more.
The emails appear to come from the Chief Finance Officer or Chief Executive Officer, which in itself is a sign of possible fraud. It raises the question of why someone so senior would be communicating with the council.
Other cases involve individuals emailing the council and asking to be made liable for a business rates account.
For example, a man from London claimed that he had become the new occupant of a business premises in Yorkshire back in January. He emailed the council asking for his account details, claiming that he was the occupant and needed the information to apply for a grant.
Business rates are not being collected from retailers this year due to the pandemic. This means that anyone who claims to be liable will not have to pay rates. But they are attempting to gain access to account information (such as the reference number) needed to apply for grants.
Emails appearing to come from genuine organisations usually ask for their business rates account number using the excuse that the paperwork is in the office and they can’t access it.
Councils are already under a huge amount of pressure dealing with legitimate requests. Sadly, fraudsters are taking advantage of this.
They add to the pressure by accusing councils of losing documentation. Emails state they became the occupier earlier in the year but their application was lost. This is their explanation for why they’re asking to become liable several months later. It also creates a sense of urgency.
Essentially there are two different but very similar types of scam.
Scam one:
- Someone emails the council pretending to be the liable party on a business rates account.
- They ask to be reminded what their account number is because they don’t have access to the paperwork.
- They then use this account number to apply for a Covid-19 business grant.
Scam two:
- Someone emails the council saying they moved to a new business premises in the area before March 2020.
- Often they use a tactic to add pressure, eg claiming they tried to contact the council months ago, but their application form was lost.
- They don’t have to actually pay the business rates because they’ve been suspended.
- They can access a Covid-19 business grant with the account info (up to £25k).
These scams both present ways in which fraudsters attempt to falsely obtain business grants. Either they pretend to be the liable party, or they attempt to become the liable party. Both are a means of gaining the business rates account number which is then used to apply for the grant.
Thankfully, business rates teams flagged these emails as suspicious and sent them to Veritau. Staff thought it was odd that a person based in London would become the occupant of a business premises in North Yorkshire. They also noted the odd formatting of emails, questionable email addresses, and spelling mistakes.
In one email seen by the team, the well-known coffee shop the fraudster pretended to be from was spelt correctly in the email itself but wrongly in the email address. Local knowledge also helped business rates staff identify the requests as possible fraud. They contacted the current occupant who confirmed that he hadn’t vacated the property.
Several emails appear to have originated in South Africa. Either this is where some of the fraudsters are based, or they are using a virtual private network (VPN) to make it look that way.
In one incident, following the pattern of scam two, a council elsewhere in the UK paid out £90k in fraudulent grants. Applications were received from multiple people claiming to represent established businesses in the area.
The real business owner then got in touch and the council realised they’d been a victim of fraud. A range of bank details were used in the application making it difficult to spot. The council in question is now asking applicants to provide bank statements.
