Businesses cheated out of one billion euros

  • Companies are often targeted for scams.
  • Benelux wanted to put a number to an often-overlooked phenomenon.
  • According to its investigation, the damage could be between €850 million and €1 billion.

Fraudulent invoices, false entries in professional directories, fake domain names, banking phishing. In the past few years, companies have been targeted by numerous serious scams. This is a well-known phenomenon, but its breadth was difficult to estimate.

The Benelux secretary general had decides to remedy this shortcoming. “A lack of data leads to underestimation of the problem,” notes Luc Willems, the Benelux secretary general, “it usually involves small amounts. These cases are too small to concern the justice system. The result is a feeling of helplessness on the part of the companies who fall victim to them, and of impunity on the part of the scammers. When we add it all up, however, we learn that the totals are enormous.”

The Belgian-Netherlands-Luxembourg union opened an investigation and surveyed 1,150 companies in the three countries. “80% of them have admitted to being targeted by one or more scams,” explains Luc Willems. “Among these, 22% signed a contract and 12% even paid all or some of the money that was demanded of them.” Most of these swindles involve small amounts of around €3,000. One has to realize, however, that Benelux is home to over 1.76 million SME’s. By extrapolating the survey results, the estimate of financial damages falls in the neighborhood of €850 million to €1 billion per year.

This does not take into account other organizations such as schools, hospitals and non-profit organizations, which also fall victim to the same practices. These scams have a clear “cross-border character” remarks Luc Willems. The Benelux investigation reveals that in 87% of the cases, the scammers were based in a European Union Country (Belgium, Netherlands, Germany, France, Luxemburg, etc.) versus 2% in Asia or North America.

The professional organizations are relieved that this study was finally conducted. “We are absolutely delighted that someone is concerned about this,” explains Thierry Evens, spokesperson for the UMC, the union for independent enterprises. “We’ve been banging our heads on a wall for years against political and legal near-inertia. The scammers act with total impunity. Some have even gone to commercial court to sue for the sums named in their illegal contracts!” The UMC spokesperson emphasizes the importance of the amounts in play. “Even if we only can account for half of the total calculated by Benelux, it’s still €400 million in employment and investment lost just in our three countries,” he ensures. “The damage is not limited to financial, but also morale issues. We have a long line of company heads driven to tears from the guilt they feel for being taken in.”

Warning system

How can this phenomenon be stopped? “A legislative response is not so simple,” explains Thierry Evens. “Scammers hide behind a legal façade. We need to base it on consumer protection law, and this, on a European scale.” Luc Willems is of the same opinion, and Benelux can be the guinea pig. “Today, there is no legal basis we can use to adequately address these scams. Cunning scammers can cheat honest companies without ever breaking a law. We can however draw inspiration from the fraud helpdesk that exists in the Netherlands.” Consequently, Benelux has recommended formal prohibition of these practices on the territory of any of the three states, as well the creation of a rapid warning system and the establishment of preventive actions. “We also call on the ministers of justice to start work on this.” concludes Willems.

BERNARD PADOAN

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