Cloning is becoming a real issue in our industry, and no one is safe. The now common dupe has affected some of the biggest names in the industry. But how are criminals getting away with it?
Umbrella company cloning is a simple scam, where a new company is registered with Companies House with a name that is almost identical to an existing umbrella company. Only one character needs to be different for the registering body to recognise it as legitimate.
The hoax usually begins with fraudsters posing as a diligent contractor and approaching an umbrella company to get their hands on a compliance pack, which lists which companies are the end hirers of that umbrella.
Then, multiple clone companies are registered with Companies House, all with just one or two different characters in the company name. The fraudsters then reach out to recruitment agencies, telling them that the umbrella has changed its bank details, either due to a criminal hack, a change in ownership or to offer more security.
The clone company can provide legitimate registration documents from Companies House, and often VAT documents too, to further convince the mark that the request is genuine.
Shockingly, Companies House does not check or verify either the identity or the address of people who register companies. And they currently only require that one letter be different from the name of an existing company to register a new one.
CEO of the Freelancer & Contractor Services Association (FCSA), Chris Bryce, is angry that Companies House isn’t doing more to stop the clones. “The root cause is the criminal but the system itself does not make it difficult for clones. It’s baffling how this situation has come to pass,” he said.
Legitimate umbrella companies are aware of these scams and are doing their best to protect their clients. But agencies also need to be diligent and be on the lookout for communications which might not be genuine.
Both umbrella and recruitment companies should operate a Single Point of Contact (SPOC) for the transfer of secure information such as banking details. All parties should have a password that is given verbally and not stored on paper or electronically.
If you’re not sure whether the communication you have received is genuine or not, contact your existing contact directly (someone who you have already dealt with in the past) to make sure, before handing over any details.
We at JMK have strict security protocols to protect our clients but please reach out to us if you have any concerns.
Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions.
We have evolved to provide a range of expert services; such as Funding, becoming a leading provider to the contracting industry.
We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.
With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.
Have a look at the wide range of services our Funding can provide to you and your business, it is far more than just payroll and finance.