Mar 05 2024

Companies House Fraud, and How to Protect Against It

Spot the warning signs and avoid the bad actors

Ottolenghii Limited, Zizzi – Cambridge, Dinner By Heston Blumenthall

You’d be forgiven for thinking these were innocent typos, but actually, these are the names of clone companies set up on Companies House in order to exploit and profit from established, recognised names. By setting up these fake directorships, bad actors can open new business and credit cards, apply for loans and overdraft accounts, making off with the money and leaving the person impersonated on the hook.

Given that Companies House is operated by the government, you might expect that rigorous identity checks apply for anyone looking to open a directorship, but that is not the case. Directorships can be set up for a £12 fee along with paperwork requirements, though none of these involve ID checks – and whilst Companies House does have a list of protected names, this evidently isn’t dissuading fraudsters, and they’ve been getting away with it for years.
While the examples that hit the news in the last few weeks have been big names, this scam has also targeted unsuspecting members of the public and has been active for years. According to Which? approximately 10,000 people applied to have their addresses removed from Companies House in 2022 after discovering that it was being used without their consent. Likewise, a similar number of people applied to have their names removed after they had been incorrectly named as directors of companies despite knowing nothing of the company’s existence.

So why does this happen?

By creating false directorships under other names and addresses, bad actors can then open business bank accounts and overdraft these accounts, and likewise can use Companies House documents to obtain loans under these names. When this fraud is identified, police and debt collectors are at a loss, since all the documentation lists names and addresses which are in fact unrelated to the fraud. It can also cause victims of this identify theft to suffer immense stress and reputational damage, as their personal details are wrongly associated with these frauds.

This can also affect investigations which utilise Companies House as a source, as it may falsely indicate that someone has been actively establishing companies since an onset date. Given that Companies House is operated by the government and is a secure .gov domain, many users incorrectly assume that the information included in the register is verified and legitimate, there is a caveat on the site which states that they do nothing more than cursory checks on documents. This can cause researchers and investigators to have a false sense of security in their Companies House information which can lead them to incorrect conclusions and ultimately, waste operational time.

At NetWatch, we have come across several cases of suspicious activity on Companies House, which we have to account for in our day-to-day work. These cases have included an individual being registered as the director of an oil-extraction business despite living several cities away and having no association with the industry through either family or friends, as well as an individual with over 45 registrations on a single day, in wildly varied industries, again unrelated to their actual profession and location. These companies all feature minimal actionable information and do not have associated websites or social media pages, which would be expected from legitimate businesses. Attribution is key to everything that we do at NetWatch, and Companies House is no different – you can read more about the importance of correct attribution here.

What can you do?

The Economic Crime and Corporate Transparency Act was introduced at the end of 2023, with the aim of creating a Register of Overseas Entities (ROE) and reforming the way in which Companies House handles the creation of fraudulent companies. Of course, this legislation will only be able to go so far – while Companies House has announced that it will be bringing in identity verification for anyone setting up, running, owning or controlling a company in the UK, it is unclear how long this process will take to audit the whole register.

In the meantime, there are a few simple tricks that you can use to sense check directorships for persons of interest.
Firstly, let’s talk location. If the location of a company is wildly different to the location we know the person of interest to be associated to, then this should raise flags. By itself, this does not necessarily mean that the registration is fraudulent, but it would warrant further investigation, not just of the company but also of the person of interest, in order to ascertain whether there are other connections to the location that we have not identified.

Furthermore, you can also carry out Google Maps checks of the registered and correspondence addresses to ascertain whether it appears legitimate. For instance, an estate agent firm would likely not be based out of an industrial estate, and an accountancy firm would be expected to have an actual office, rather than a building site.

Corroboration is key when it comes to Companies House – are there other sources which confirm the information that you are being told? Does the address match? Are the co-directors known to the person of interest? Is there a website under the same company name which is linked to the person of interest? Is there an active phone number provided? These are all simple questions to ask yourself during an investigation in order to critically evaluate your information.

If the company in question is engaged in financial services, then you can also search for the company or individual on the FCA register, which has more reliable checks on identify than Companies House and also flags known scam firms.

As alluded to above, it’s important to check for minor spelling errors in a company’s registration, especially as if you search for the company online, Google may autocorrect the spelling, thereby making the company look more legitimate than it is. Several years ago, there was a common shipping scam which used the company name Go! Worldwild on the invoice, which when searched online comes back with the legitimate Go! Worldwide shipping service, once again highlighting the importance of manually checking for spelling inconsistencies.

If you are conducting an investigation, or have received information on a person of interest, which you are concerned features Companies House fraud, then you can also get in touch and task us with investigating and corroborating the details of the registration using our in-house tools and skills.


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