March 22, 2022 7.00 am

North Lincolnshire Council lost £49k to online fraudster

They were able to get much of it back

By Local Democracy Reporter

North Lincolnshire Council lost £49,000 to a fraudster, it has been revealed – although it was able to get much of it back.

The conman managed to trick the council into changing the bank account into which a payment was being made. Criminals can use hacked email addresses to impersonate other people and convince organisations to change the bank details, an increasingly-common crime known as mandate fraud.

£49,000 was lost in the fraud in August 2021. However, £44,000 has been recovered, leaving £5000 outstanding.

The council says that its payment procedures were reviewed after the loss, and security has subsequently been tightened. It reports that mandate fraud has become more common in the last few months.

A report on fraud to go before cabinet says: “The methods used by fraudsters are continually evolving. None more so than in the commission of mandate fraud, a deception designed to mislead the council into changing a supplier’s bank details to divert funds into the fraudster account.

“Fraudsters are using technology to hack email addresses and spoof emails to make them look like genuine ones from suppliers. This type of fraud has also become more prevalent over the past few months, with numerous attempts reported by public authorities.

“Whilst the council has procedures to mitigate such attempts, unfortunately it was subject to a successful attempt to defraud in August, causing an initial loss of £49K (subsequently £44k of which has been recovered).

“As a result, the opportunity was taken to review our procedures in relation to changes to supplier information. A number of improvements were identified and have been implemented, providing additional security to the process.”

North Lincolnshire Council were contacted for comment.

North East Lincolnshire Council admitted they were scammed out of £22,000 in a similar scheme, also in August 2021. The council said the loss was highly regrettable, and it had reported the crime to Action Fraud.

Its finance help-desk team successfully stopped another attempt which would have seen £32,000 paid out to a fraudster in the same month.