Tuesday, 06 April 2021 11:03

Warning Issued About Insolvency Debt Recovery Scam

It’s a sad but well-documented fact that the most unscrupulous individuals will happily try to exploit any crisis for their own gain.

So it was in spring 2020, almost as soon as the first COVID-19 lockdown kicked into gear, that there was a wave of reports of pandemic-related email and phone scams, trying on everything from fraudulent PPE sales to ‘phishing’ for personal information through bogus medical registrations. 

There have been too many tragic stories to emerge from the pandemic to list. Amongst many other hardships, people have lost their jobs and livelihoods and businesses have gone under. 

Now it appears that heartless con-artists are trying to make a fast buck out of that, too, by approaching investors saying they can recover cash owed them by insolvent companies - for an upfront fee, of course.

The Insolvency Service has put out a bulletin warning people to be on their guard. They say they have been made aware of a number of cases of scammers approaching creditors claiming to represent the Official Receiver or the Insolvency Service, claiming they have been authorised to recover the debt.

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Fee request red flag

The big giveaway that such claims should not be trusted is the request for a fee. This is something neither the Official Receiver nor the Insolvency Service would ever do. Of course, once the money is handed over, that’s the last the creditors hear of it.

But as always in these situations, con-artists like this are clever at preying on people’s concerns and making their claims sound legitimate. Lots of people are facing financial hardship at the moment. If you’re a small business supplier or a contractor and you get the news that a client who owes you a considerable amount of money has been wound up, it’s not always easy to think rationally.

The scammers involved have been using a variety of tactics to trick people into thinking they are genuine - their prime aim is to establish trust. 

Victims have been targeted with so-called ‘spoof’ attacks, where the scammer essentially steals the identity of a genuine employee of someone working for the Insolvency Service or Official Receiver’s office, and uses their name and credentials to make the approach. 

These tactics can be pretty sophisticated - when you look up the phone number you receive a call from, it turns out to be an Insolvency Service number, or you look up the name the person who called you gave, and their LinkedIn page tells you they work there.

Again, the key giveaway is the request for a fee. There is nothing in law to say that the exchange of money will push you up to the top of the list of creditors in recovering assets, and no genuine operator instructed by the Insolvency Service or Official Receiver will ever ask for this. 

Also, note that funds are only ever released back to creditors if and when assets in a liquidised company are realised - there’s never any guarantee or agreement that this will happen.

If you are approached by anyone offering to recover money you are owed by an insolvent company in return for a fee, you can report it immediately via Action Fraud.

Image by mohamed Hassan from Pixabay

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