In August 2016, a Queensland Council reported it had lost over $450,000 of ratepayers’ money to scammers.
The Council made nine separate payments after being duped by scammers posing as one of their providers of professional services.
The Council had received a number of phone calls and legitimate looking emails from these scammers and were convinced to change bank details redirecting regular payment instalments.
The scammers came undone when the legitimate service provider contacted the Council to report they were missing payments.
It has since emerged that the scammers had targeted a total of 6 local Queensland governments.
WHAT PROCESSES SHOULD HAVE BEEN IMPLEMENTED TO PROTECT LOCAL GOVERNMENTS?
Reportedly the fraudsters knew detailed information about current work/projects and the suppliers involved in that work and were able to feed that information back to the council.
First, any phone calls from service providers requesting a change in banking details over the telephone should be deemed suspicious as this is not standard practice. Any requests of this nature should be substantiated with written correspondence.
If banking details are changed, it is beneficial to call the service provider to confirm this change. It appears this simple step, or something similar in its effect was undertaken by the other local governments targeted, enabling them to identify the scam before any money changed hands.
WHAT CAN BE LEARNT?
This matter serves to highlight that any organisation, or individual can fall victim to a scam.
Ultimately, prevention against these kind of scams becomes a lesson of due diligence.
Australian Securities & Investments Commission (‘ASIC’) recommends that in order to avoid scams, legitimacy checks should be undertaken.
This can be undertaken by asking questions about the owner of the company and what their address is. Or simply calling the company yourself and confirming any relevant information. ASIC also recommends protecting personal information such as banking or credit card information.
The Australian Competition & Consumer Commission (‘ACCC’) provides a free information service on their website called ‘ScamWatch’. This service provides information about presently known scams and advice on how to best protect both individuals and companies. The ACCC recommends being alert to the fact that scams exists, to know who you’re dealing with, and to beware any requests for personal details or money.
WHAT IS THE TAKE HOME MESSAGE?
Scams do not discriminate.
Whether it is a local Government Council or the small business owner, scammers will target anyone. You don’t need to be an organisation in control of large sums of money to be a target.
Simply being aware of the existence of scams and possessing a healthy level of distrust may succeed in protecting yourself against a significant loss of money.