A Midland financial expert is urging greater vigilance in the face of identity fraud.

Guy Morgan, partner at the Midlands office of accountants and business advisers Horwath Clark Whitehill, warned of the serious implications for companies caught up in the scam.

It could result in serious losses and impinge on credit ratings.

Mr Morgan was speaking out following claims that entrepreneurs, particularly those on salaries above £50,000, either at director level or running their own business, were three times more likely to have their identity stolen.

“Directors should be aware of the dangers and take action to mitigate the risk of falling victim,” said Mr Morgan.

There are many ways in which fraudsters can commit corporate identity theft.

Some of the key risk areas are:

Social engineering – a fraudster persuades you or an employee to reveal information which could be used to defraud the business, typically through a phone call.

Technical schemes – often involving email interception through a forged web address.

Phishing – known to most people who use internet banking facilities, this is the practice of sending a false email requesting personal information.

Fraudulent websites – taking payments for goods that are never delivered.

Imposter websites – a fraudster setting up a website with an almost identical name to a high volume internet seller, in the hope of profiting from spelling errors.

Forwarding address fraud – the most commonly perpetrated method involving fraudulent redirecting of post.

Meanwhile Companies House, once a relatively easy target, has taken steps to reduce the risk of fraudsters being able to misuse its documents.

Previously criminals could hijack the identities of legitimate companies by making fraudulent entries. They then exploited the firm’s good name and credit rating.

Companies House has sought to combat this via the filing of information online, submission of all documents online, and providing an alert system notifying companies of changes to their details.

From October 2009 Companies House is introducing new legislation whereby anybody can use a service address rather than a residential address. At present it is very straightforward for fraudsters to find directors’ home addresses on Companies House appointment of director documents.

Mr Morgan said: “Ultimately, being a victim of corporate identity fraud can be very serious.

“It can take time and effort to recover financial losses and it can be difficult to rebuild credit rating and reputation for trustworthiness. The key effective way to combat this risk is increased vigilance.”