Stolen - how fraudsters can 'steal' a company

While you may be used to the idea of protecting your business premises from theft, you may not expect your entire company to be stolen. However, this is becoming an increasingly common fraud. Con men target an established business and then, by submitting false forms to Companies House, effectively steal the company. The con men then set about ordering goods based on the stolen company's reputation and, in the process of doing this, destroy a credit rating that may have been nurtured over several years.

This fraud is happening, and it is happening in Harrogate. We were recently approached by one of our clients whose company was left £17,000 out of pocket following such a fraud.

Our client had been asked by a potential customer to supply £17,000 worth of computers and stationery. As you would expect, the usual credit checks and searches were carried out, all of which said the company had an excellent credit rating and a long trading history. Given the size of the order, our client even required one of the directors of the company to sign a personal guarantee. Only after all this were the goods delivered.

The company had in fact been 'stolen', the trading address was a rented warehouse, and the director's details were bogus. According to local witnesses, lorries had been delivering goods to the warehouse for a week before the con men cleared it out and disappeared.

How can you guard against this sort of fraud?

To protect your company, Companies House now offer a monitoring service where, for a small fee, they will tell you every time a form is submitted relating to your company. This gives you the opportunity to check for any bogus applications.

In terms of guarding against dealing with stolen companies, the solution is not so simple. On top of the usual credit checks, it is possible to search recent filings at Companies House, and, if a search shows recent inexplicable changes, you need to be asking more questions of your potential customer. If there are genuine reasons for the changes, then they will not mind your doing this. Other than this, you must rely on your instincts and careful checks. You may be able to visit the trading address; you can ask to meet the directors in person; and in any event if something does not seem right, ask questions. This may all seem over the top, but the bigger the order, the bigger the risk and the more care you should take.

February 2003

If you have any questions on this topic, please do not hesitate to contact Simon Morris Caroline Litster or Deborah Boylan of the Commercial Team at Raworths.