Credit Management September 2019

CMNEWS
A round-up of news stories from the
world of consumer and commercial credit
Written by – Sean Feast FCICM and Alex Simmons
Cifas warns of growing
fraudulent behaviour
CIFAS has released a report in
conjunction with WPI Economics,
showing one in seven (14 percent)
British adults have committed
one or more types of consumer
fraud, while two in three (66 percent) know
someone who has.
The most common type of consumer
fraud committed by the British public is
‘fronting’, where a driver declares they are
the main driver to an insurance company
when they are not (six percent), closely
followed by ‘deshopping’, the deliberate
return of goods for a reason other than
specified, which one in 20 (five percent)
admit to carrying out.
Alarmingly, many Britons consider some
types of consumer fraud as reasonable, with
the highest proportion (39 percent) seeing
‘fronting’ as reasonable. However, the
consequences of committing this type of
fraud could see individuals driving without
valid insurance, and in some cases, result in
a criminal record.
Interestingly, ‘money muling’ is
considered reasonable by one in five (22
percent) Britons, the consequences of
which could result in individuals unable to
open a bank account and obtain a mortgage,
as well as a potential prison sentence.
The research revealed that younger
people were more likely to take part in
fraudulent activity, with 21 percent of
18 to 34 year-olds admitting they have
committed first-party fraud, compared to
only six percent of people aged over 65.
The report found that companies are
more likely to invest their energy into
detection and prosecution of consumer
fraud, rather than prevention. This is
despite the fact that detection can be
problematic, and prevention is generally
regarded to be more effective. The report
argues that efforts to reduce fraud would
be better directed towards awareness
campaigns focused on educating
consumers about different types of fraud
and their consequences, such as criminal
records, fines, or difficulties in obtaining
banking and credit facilities.
See our article on page 30.
cifas.org.uk
MOST small- and medium-sized
enterprises (SMEs) are afraid to take
action against a late payment, despite
unpaid invoices posing a significant
issue for their business, according to a
new white paper from the Small Business
Commissioner, Paul Uppal, and business
lender Growth Street.
Some 75 percent of SMEs would rather
not chase late payments for fear of
damaging their client relationships. A
further 76 percent said that they were
more worried that their invoices would
not be paid at all, if they took action
SMEs still fear chasing payments
against late payments.
The white paper, titled ‘Taking Notice
of UK Business’ surveyed 500 UK SME
decision makers in an effort to find out
how they feel about payment terms and
late payments. More than a third of SMEs
said that they had been subject to unfair
payment practices, while almost half (47
percent) said that they had been subject
to late or otherwise unfair payment
practices from large businesses.
Most of the businesses surveyed had
payment terms of up to 30 days, while
only 14 percent said that they had agreed
payment terms of more than 61 days with
their suppliers.
CICM Chief Executive Philip King
FCICM says the report confirms an oftcited
challenge: “Agreeing payment terms
upfront and deploying best-practice
credit management policies are still the
best way of protecting small businesses
from the challenge of late payment, but
businesses should never be afraid to
chase money that is rightfully theirs. A
customer that doesn’t pay simply isn’t a
customer they should be doing business
with.” growthstreet.co.uk
The Recognised Standard / www.cicm.com / September 2019 / PAGE 6