A new criminal activity is on the increase in the umbrella sector – the so-called cloning of compliant umbrella companies. This scam works by fraudsters setting themselves up in business using a company name which very closely resembles that of a compliant business. These scammers then seek to extort payroll monies out of recruitment firms who believe they are paying the compliant business, or entice contractors to join their scheme offering unrealistically high take-home pay. In both cases the recruitment firm or contractor wrongly believe that they are dealing with a compliant umbrella firm, but unfortunately that business is being impersonated for criminal gain.
What can you do to protect yourself if you’re a contractor?
Always ensure you check the details of your chosen umbrella on Companies House, including the directors – are they the same individuals as the legitimate company? Directors of cloned companies are often based overseas, and the FCSA reports that the current trend is towards a handful of individuals based in India.
Is the company name shown exactly as it should be? Names of cloned companies will usually be very similar to the compliant business being impersonated, but with perhaps just one or two words differing. Also, check the history on Companies House. Clones have only sprung up in the last couple of months, and typically won’t have any accounts lodged.
Query any financial illustration that seems to offer you an unfeasibly high take-home pay from a “compliant” umbrella firm as it be from a clone impersonating the real company.
What can you do to protect yourself if you’re from a recruitment agency?
Be very wary about any requests to change any payment details to an umbrella company, and only make such changes once you are certain it is a genuine request. You should have a name individual at the umbrella company that you deal with in relation to anything financial, so make sure you contact then yourself directly to validate any banking changes. And even then, proceed with extreme caution!
If you accidentally pay a cloned company that is impersonating one of your genuine suppliers this money is very likely to be unrecoverable. Remember that this is your workers’ income that is being misdirected, and you have both a responsibility and a duty of care to them.
In short, you should always be vigilant when it comes to your income (if you’re a contractor) or your workers’ income (if you’re an agency). If something doesn’t seem quite right to you, please make sure you double-check everything and cross reference as much information as you can. And if you do discover a clone company, make sure you report it to the company that is being impersonated.