Between juggling numerous projects at once, consistent pressure from customers, and meeting regulatory demands, construction workers often find very little time to prevent fraud, despite the size of its threat.

In 2024, Taylor Rose highlighted a survey which revealed that a quarter of UK-based construction companies had been targets of fraud attacks in 2023, with 40% of them closing as a result of fraud’s financial impact.

As you can see, the effects of fraud in construction are quite drastic. So, how does it take place? There are several methods:

Invoice fraud: Contractors can often be defrauded by their vendors through false invoices for materials or tools. Invoice fraud can also be committed by contractors who are overcharging for services not provided.

Payment fraud: In some cases, construction firms may employ workers ‘off the books’, meaning there is no legal documentation to verify a worker’s identity nor any traceable means of paying tax.

Coordination: This happens when multiple firms offering different services work together to overinflate the scope of work requested by a client.

Technological advancements have enabled much more complex forms of fraud to take place. With most businesses now utilising technology to get work done, alongside the major growth of artificial intelligence, the possibility of tech-based fraud taking place has expanded.

Phishing: Through nefarious technical methods, fraud victims can be duped into providing sensitive company information, with tactics like email phishing a core example.

AI: With the boom of generative AI tools like ChatGPT, the world has been forcefully introduced to the mass utilisation of artificial intelligence for all sorts of purposes, including fraud.

Social engineering: Although not exclusive to technology companies, social engineering can be used to impersonate high-ranking members of staff to extract payouts or company secrets.

Hacking: Although the term ‘hacking’ is all-encompassing and refers to a multitude of different manipulation methods, all companies that use technology can become victims of fraud via hacking. This includes the use of computer viruses, denial-of-service attacks, email compromises, data leaks, etc.

Food fraud is a sensitive subject, because it affects more than just the companies behind food production – it also impacts consumers across the world. Burdening businesses with £268 million per year, food fraud is highly expensive and wide-reaching.

Food fraud often occurs in the following ways:

Theft: Dishonest appropriation of food, drink or feed products from their lawful owner for personal gain.

Expenses and invoice fraud: Unsolicited or inflated invoices or claims submitted by employees or suppliers for payment.

Document fraud: Falsifying documents to sell, market, or vouch for a fraudulent or substandard product for financial gain.

Mandate fraud: Third parties pose as suppliers or the organisation, causing payments to be diverted to fraudsters.

The hospitality industry thrives on its reputation. Star ratings and brand recognition both play a vital role in attracting customers for continued business. When fraud attempts happen, this reputation can be negatively impacted, causing customers to think twice about their options in the future.

Some common types of fraud in hospitality include:

Supplier fraud: Hotels and restaurants will often have contracts in place with their suppliers in return for the goods needed to run their operations. This can leave businesses at risk of fraudulent activity by their suppliers, especially if they’re not audited or inspected.

Dine and dash/failure to pay: While often an isolated incident, if your restaurant develops a relaxed reputation, customers could take advantage by not paying for your services.

Substitution: Just like with the food industry, hospitality companies may sometimes swap in cheaper alternatives for more expensive foods or services offered at their establishments. Think of practices like re-bottling wine, for example.

Till fraud: Theft from employees, sales inflation, false refunds – all of these types of fraud can be committed by staff at the till, without your knowledge.

Both physical and digital retail businesses are at risk, no matter where they sell. In-person fraud can see thousands of pounds being stolen at a moment’s notice, while digital fraud can float under the radar for days, weeks, months, and maybe even years at a time.

Theft: Whether it’s done by internal or external attackers, theft is the most ubiquitous type of fraud, and it’s not just retail that’s susceptible to it.

False returns: Abusing a return policy isn’t just frowned upon; it can be fraudulent. Scammers can take advantage of things like the UK’s Distance Selling Regulations to return products after ‘trialling them’, or sometimes even exchange used products for new ones.

Price swap: Customers may attempt to gain a reduction on their final bill by swapping the barcode of a product with a cheaper alternative. Likewise, retailers themselves may silently overinflate the cost of an item while checking out to make more profit without the customer’s knowledge.

Fraud is conducted in many ways, regardless of sector. Some industries can even be prone to the same types of fraud.

Just like fraud itself, our business fraud insurance product is sector-agnostic. We work with a wide variety of companies to provide protection if they experience fraud.

At Allianz Trade, our goal is to help your business thrive. Whether you're looking to alleviate cash flow problems with trade credit insurance, or protect your bottom line from attackers with business fraud insurance, we’ve got your back.