Business & Investment

Why is Companies House helping scammers?

Tens of thousands of people have scammers set up companies in their names, and scammers use the details to take out loans and deceive consumers.

Victims live forever for fear that debt collectors and police will tie them to dangerous companies and loans. This growing type of fraud, which is part of the wider crime epidemic that is sweeping the country, is being filled without resistance from Companies House, the official national registry of over 4 million limited liability companies.

Despite the government’s commitment to strengthen its authority, Companies House cannot check the authenticity of the information provided by those who set up new companies.

Increase: Tens of thousands of people have scammers set up companies in their names, and scammers are using the details to take out loans and deceive consumers

As a result, one expert told an email on Sunday that it was a scammer’s paradise.

Fraud is now at a shocking level in the UK. The amount stolen by such scams increased by 30% to £ 754 million in the first half of this year. For months, MoS has campaigned for urgent action to “pin the fraudsters,” including collaborative action by police, government, and banks to tackle the wave of crime head-on.

Personal information fraud (the type committed by those who set up companies in the name of innocent consumers) is on the rise.

Recorded cases increased by a quarter in the first half of this year. Experts believe this is partly because fraudsters have found a way to get the financial support provided to companies that are legally struggling during a pandemic.

One of the victims is Michael Waller, 77, director of a printing company in Kent. “I was shocked to receive a letter from Companies House in May congratulating him on becoming a board member of the newly established business, Capital Financing Ltd,” he says. “As a director, I was told I was legally responsible for doing that.”

Michael has never heard of capital finance and does not know what it is doing (if any) or who is behind it. And now we are facing a fight to get rid of his details. So far, Michael is unaware of the loan made in his name. But he fears it’s only a matter of time.

How does this happen?

Promoting this increase in personal information fraud means that it is easy for anyone to set up a company in the UK.

Someone can register a business at Companies House in minutes for just £ 12 without showing identification. Also, scammers rarely stop entering information they like. For example, details about who is supposed to be a business director and his address.

The cash register is littered with false and fraudulent information. A quick search reveals that the directors of the registered companies include Adolf Tooth Fairy Hitler and Stalin Stalin. Companies House only registers the information provided and has no legal authority to confirm or ask questions about it.

In fact, Martin Swain, director of strategy, policy and external communications at Companies House, recently admitted:

After Michael Waller was fraudulently registered as a director of the company, he decided to set up the company himself and see how easy it was. He wasn’t asked for identification, and with the help of his computer-savvy grandson, a company called Fraud Prevent Limited was registered in 29 minutes. Tony Heatherington, The Mail on Sunday Consumer Champion, said: It depends on everyone being honest, but it’s not.

He says it’s a waste of time to let Companies House know that the information about the registered company is incorrect. When the information is accepted by Companies House, it gains an air of legitimacy. For example, banks often use this to find out more about a company, its accounts, and directors. Helena Wood is an Associate Fellow of the Financial Crime and Security Research Center of the Royal United Services Institute in London. She states: ‘The Companies House register is not suitable for your purpose and needs to be corrected.

“Many heels have been dragged in by the government and victims have been exposed to identity fraud, which has jeopardized Britain’s reputation as a place to do business.

There are plans to strengthen the power of Companies House. Wood says the details must be included in the Queen’s Speech next year.

She adds: “The government does not understand or understand that surveillance of poor Companies House is contributing to the fraud problem, but is prepared to prioritize the ease of doing business in the UK.”

Wood believes that within the next few months, more and more people will find that there are companies that have been fraudulently registered under their names.

“During a pandemic, a company could have been set up in the name of someone else to fraudulently claim billions of pounds of repayment loans and other financial support,” she says. “If Companies House could perform the proper checks, it wouldn’t have been easy to abuse the system.”

Lenders typically do not rely on Companies House data to provide loans. But during the pandemic, standards fell when it was imperative to provide a cash lifeline to struggling businesses. Parliamentarians’ public accounting committee warns that loan fraud costs taxpayers tens of billions of pounds.

How scammers manipulate scams

When a scammer sets up a company in someone’s name, it suddenly opens up a wealth of opportunities for criminal activity.

They can use the new company to apply for loans and versaries that they do not intend to repay. The scammers remain anonymous, so they don’t hook up on loans. Thankfully, victims are not required to repay their loans after showing that their information has been misused without their knowledge. But if someone appears to be involved in a fake company, it can damage the reputation of the real business in which they are directors.

Now we need action to stop fraud

If Companies House validates the information it receives from people who want to start a business, it will be of great help in cracking down on fraud.

Reader champion Tony Hetherington believes that anyone registering a company must provide a national insurance number. Companies House can then use this to verify with HM Revenue and Customs whether they are who they say they are. “It will also stop fraudsters registering directors of companies that died or emigrated years ago, as is happening today,” he says.

James Jones, a credit referral agency, said that anyone worried that their personal information could have been used for fraudulent activity should contact the fraud prevention service Cifas and ask them to add a warning flag to their credit files. I can do it. agency. He adds: “Warning flags can delay real credit applications, but they may be worth it if you want to prevent someone from fraudulently taking out a loan in your name.”

Companies House offers PROOF, a free service that allows directors to protect their company from unauthorized changes in records. Go to gov.uk/guidance/protect-your-company-from-corporate-identity-theft.

Victims are also struggling to remove fraudulent details from their registries. In some cases, Companies House will take weeks, but will remove the information. Some fraudulent information can only be deleted by court order.

Amber Burridge is responsible for the financial intelligence of the fraud prevention service Cifas. She warns that there is a second ominous reason that scammers may set up a company in the name of another person. She states: ‘Criminals can use Companies House’s list of companies to add a touch of legitimacy to their fraudulent campaigns.

‘Many consumers trust the organizations listed. Therefore, by registering a business, criminals can deceive more individuals. The riskiest are the directors of real companies, including Michael Waller. They are often targeted because they have good credit records-so loans filed in their name are likely to be approved.

Company directors also provide personal information on Companies House, such as name, address, and date of birth. Anyone can freely browse and use these.

According to a survey by the fraud prevention service Cifas, nearly one in five victims of spoofing fraud is a director of the company.

Originally from London, Helen Shorthouse, 59, is a board member of several legitimate real estate companies. She recently discovered that she had been illicitly appointed to the board of directors of a new company, Helen ST Ltd.

She is now very worried that a loan will be taken in her name, or that the police will knock on her door because she is a director of a fraudulent company.

“It’s upset,” she says. “I contacted Companies House and I’m not responsible. It led me to an action scam, but I wasn’t interested because it hadn’t been committed yet.

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Why is Companies House helping scammers?

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