These cases of AFF, are unfortunately not that uncommon and it is something that the NACFB has been trying to raise awareness of since it was established in 1992.
To combat the rise of AFF, a group of brokers teamed together to create a Code of Practice to ensure that all those that joined the Association were adequately versed in best practice for the industry.
Gradually, with more press coverage and a rapidly growing membership, the NACFB became recognised as the trade body representing best practice in the commercial finance industry and the Code of Practice is now recognised across the industry.
In the early 1990’s funding was particularly expensive, which led to a number of disreputable ‘brokers’ taking advantage of the situation by offering deals with very low rates and offering funding in cases where many of the main lenders would not lend or at levels that were prohibitively expensive to the client.
These fraudsters were not huge in terms of numbers; however, it doesn’t take a vast amount of opportunists to tarnish the industry as a whole.
The boom years led to funding becoming less expensive and the work that the NACFB carries out with the Code of Practice led to AFF becoming far less widespread.
However, in 2008, largely due to the tightening of credit, the incidence of AFF has once again become more prevalent.
It had become harder to gain much needed finance to ensure that businesses and livelihoods could survive and In desperate times, people can make bad choices and this is precisely what the fraudsters prey upon some people will be drawn in to what seems like a very good deal for a very poor proposal.
The unfortunate reality is; if it looks too good to be true, then it generally is. Aside from the obvious sad fact that clients have lost large sums of money to the fraudsters, it is particularly frustrating as there are funders out there that can help SMEs and clients.
We have a range of funders on the NACFB panel that are providing excellent funding to SMEs and clients and they have done a good job in filling the void left by the mainstream lenders.
In desperate times, people can make bad choices and this is precisely what the fraudsters prey upon
Essentially, there are few stages stages to the Advanced Fee Fraud. The client is often reeled in on the promise of funding with low rates, often in areas that the mainstream lenders have refused to fund due to their credit restrictions.
The trouble with the AFF cases is that many of them do present themselves as plausible businesses that are operating to find funds – some even advertised in the national press.
It is only after the client has been duped that the real details of the companies come to light and by this time the fraudsters are doing a good job of evading follow up calls on the deals progress.
To monitor the increase in AFF cases, the NACFB established the Fraud Intelligence Committee in 2008. The Exeter office received a large number of phone calls from members of the public with concerns over the activities of certain ‘brokers’.
Again and again, the same names were being mentioned with strikingly similar reports in the way that the brokers were conducting their business.
All of these calls were detailed and sent to the National Fraud Authority to look in to the incidents and take action where necessary.
The NACFB FIC keeps records of companies that charge up-front fees to clients without the likelihood of funding ever being offered.
However, this is not aimed at the many brokers who need to charge a reasonable appraisal fee when considering a possible case at the outset, although the NACFB does have guidelines on these fees.
With the depressing rise in AFF, the Association has strived to bring the problem to the wider public and the SMEs that are at risk of being caught out by the fraudsters.
We have written numerous articles and informed the NACFB membership of the problem with the aim of working with our brokers to bring cases to light.
The most recent incident of AFF to come to light was the Lord Davenham case which has been extensively covered in the national press. I recently commented in The Mail on Sunday regarding AFF as this activity does not look set to go away any time soon and we wanted to offer the Association’s views on the matter.
It is encouraging to see that the national press are also taking an interest in these cases and the misery that the fraudsters create. Ultimately, the fraudsters are messing with peoples’ livelihoods, which also threaten the reputation of the professional brokers that we as an Association represent.
Our message at the NACFB is to remain vigilant to these fraudsters and to ensure that adequate investigation is carried out on the prospective broker or funder that the client is looking to use.
It is our responsibility to ensure that our brokers’ clients are steered in the right direction by our membership to avoid any fraudsters that are operating outside of the Association’s remit. As stated earlier, if the deal looks too good to be true then it probably is.
The NACFB registered broker has the professionalism and expertise to access a wide range of lenders that would not necessarily be known to the SME or client, all of which have been vetted by the Association and provide excellent services.
Additionally the NACFB operate an industry recognised Code of Practice and scrutinise its broker applicants before recognising them as members.
In the unlikely event of a dispute between the client and the NACFB registered broker, the NACFB can intervene to overcome any problems.
As an Association, we are larger now than when we started in the early nineties, so we have more brokers who can identify potential fraudsters and we must all work together to stamp out this practi
