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Fraudsters set up bogus companies all over UK

Homeowners in disbelief as 36 bogus companies target their addresses

Cases

April 12, 2024

It is often said that the road to hell is paved with good intentions.

This road in Swansea, however, is full of property scammers and bogus companies. Certainly much worse.

 

In the space of a few weeks, residents of Rhos Road, Swansea, have witnessed the emergence of 36 different bogus companies, all registered to their personal addresses.

 

Companies House lists all these bogus companies as livestock farms - dealing with cattle, swine and, surprisingly, even buffalos. Needless to say, there are no farms in Rhos Road, let alone buffaloes.

 

How was such a pattern possible? To get to the bottom of this story, we have to start at the beginning.

 

Spotting the Fake Address Fraud

 

The first doubts arose thanks to Rita and Brian Davies, a retired couple living down the street. On a cold morning like any other, Mr and Mrs Davis started receiving letters not addressed to them.

 

These missives, sent from Companies House and an online bank, congratulated strangers for the opening of new companies - alarmingly registered to the Davies' address.

 

After a few days the letters kept arriving, so the Davies decided to shed some light on this mystery by visiting their bank. The result of this brief visit was quite shocking.

 

All it took was a quick check on the Companies House website to discover that the Davies' property housed various shady Chinese companies, such as Zhuangzhixiang Ltd.

 

Not only that, but the bank operator discovered a worrying number of bogus companies setting up shop on the street within days.

 

18 different owners for 36 fake companies, 15 of which run by Mysterious Chinese individuals.

The news left the couple in dismay. Soon, the whole neighbourhood shared their plight.

 

 

The Hows and Whys of Bogus Company Frauds 

 

Unfortunately, it does not take a con artist to commit address hijacking frauds.

It is enough to think that some scammers have registered themselves as professional "archbishops" and "disk jockeys"... working for cattle companies. 

 

Indeed, the convenience and effectiveness of these frauds motivated their quick diffusion throughout England and Wales. 

Fraudsters behind bogus company schemes exploit Companies House lack of vigilance to register businesses anywhere in the UK.

 

With a minimum fee of £12, individuals can set up fictitious companies without undergoing rigorous verification processes. They just need to register an address and provide an associated business bank account.

 

Scammers do not even resort to document forgery, which is usually employed to carry out property frauds and identity theft. Companies House simply does not request ID verification, virtually making any property an easy target for address hijacking frauds.

 

This lack of proper checks has quickly become a weak spot for British homeowners.

Criminals take advantage of this loophole, registering numerous fake companies at various addresses.

 

Furthermore, they mostly target residential areas to create the illusion of legitimate businesses - where none exist.

 

This is hardly unreasonable behaviour.

In fact, the financial gains associated with such small risks are huge.

 

From money laundering to fake loans, fraudsters only need to open a bank account - often based in foreign countries - and pay a small fee.

 

Residents of Rhos Road are now well aware of this problem and have described to Wales Online their disbelief and distress.

 

"My reaction is shock, anger, and complete and utter confusion - said the 53-year-old resident Mark Williams - It should not be more difficult to get rid of than sending an email saying 'no'. Companies House should be sending letters beforehand to verify the address"

 

 

The Risks Involved for Homeowners

 

These frauds can be extremely annoying: one resident reportedly received up to 50 different letters within just 3 weeks. Yet, risks for homeowners go far beyond the hassle of receiving countless mail.

 

For while fraudsters make easy money with fake addresses and unlikely bogus companies, homeowners suffer the consequences.

 

Indeed, when an address is unwittingly involved in fraudulent schemes homeowners can face both financial and personal security problems.

 

On the one hand, loans taken under false pretences - and never repaid - can severely impact the credit score of homeowners. Damages to credit ratings are a serious concern that can change lives for the worse (read here to know more).

 

On the other, the ease with which fraudsters operate highlights the constant risk of falling victim to more serious schemes. Identity theft, for example, is becoming increasingly common, also in conjunction with fake address frauds.

 

That's why, considering the present lack of governmental monitoring, being aware of best practices against identity theft is paramount.

 

The residents of Rhos road, Swansea, are not alone in this fight.

 

The figures speak for themselves: of the 775,000 companies registered at Companies House in 2022, an estimated 155,000 (20 percent) are fake.

An unbelievable amount that is raising more than a few eyebrows.