Fraud in scaffolding

From staged vehicle accidents and phantom passengers to payroll abuse, payment diversion and compromised supplier emails, fraud is a growing risk for scaffolding businesses.

Fraud is often seen as a problem for banks, online retailers or large corporations. But it is just as relevant to scaffolding contractors, suppliers and labour providers. Fast-moving projects, temporary sites, subcontracted labour, high-value kit, company vehicles and frequent supplier payments all create openings for criminals, opportunists and dishonest insiders.

Recent NASC guidance identifies fraud as an increasing risk across purchasing, payments, IT systems, payroll, equipment, tendering, training records, materials and fleet operations. HMRC has also warned construction employers to watch for organised labour fraud, including unusual subcontractor chains, inconsistent paperwork and rates that appear too good to be true.

Luigi Maggio of NASC Insurance Services says scaffolding firms should see fraud as a practical business risk, not an abstract compliance issue. He picks out accident fraud as a particular focus: “We have seen a significant upturn in staged accidents and fictitious allegations of claims involving company vehicles,” he says. “In many cases there will be a phantom passenger involved, implying there were more people in the vehicle, and personal injury claims are submitted in addition to potential hire costs.”

Why scaffolding firms are exposed

Scaffolding businesses operate with tight margins, urgent deadlines and a mix of permanent staff, agency labour and subcontractors. Multiple sites, vehicle movements, supplier payments and several layers of approval can make it harder to pause and check. Fraudsters know that pressure can override caution.

For smaller contractors, the exposure can be sharper still. One director or office manager may handle procurement, invoices, fleet paperwork and bank payments – which makes false invoices, changed bank details or suspicious claims easier to miss.

The most common fraud risks

Motor fleet claims fraud: Company vehicles are central to scaffolding operations. Staged collisions, exaggerated hire charges, fictitious injuries and phantom passengers can turn a minor incident into a costly claim. “The risk of this can be reduced by installing vehicle trackers and dashcams, which are used as evidence to defend against fraudsters and provide evidence to both police and insurers,” says Maggio. He also advises firms to secure third-party details immediately, notify incidents quickly, photograph vehicles and carry bump cards.

Invoice, mandate and bank account manipulation fraud: Criminals impersonate suppliers, intercept email chains or send convincing invoices asking for payment to a new account. Maggio describes this as “one of the biggest concerns in relation to fraud”, particularly where email systems are compromised and large payments are diverted. Often the change is subtle: an authentic-looking footer, a familiar name and an email address altered by a single letter.

Payroll and timesheet fraud: Hours may be exaggerated, overtime inflated, ghost workers added to payroll or agency invoices submitted for operatives who were never on site.

Employee dishonesty and internal finance fraud: Funds may be diverted into personal accounts, fuel cards misused or payments authorised without scrutiny. “There are a broad range of risks from use of fuel cards, payroll fraud, payment diversion and other finance matters,” Maggio says. “There have been examples of over-inflated subcontractor applications being made and paid, or company funds diverted into personal accounts.”

Procurement and supplier fraud: False or inflated invoices, duplicate billing, ghost suppliers and collusion between employees and suppliers can all drain cash. In a busy depot, checks on purchase orders, deliveries and subcontractor applications can easily be rushed.

Equipment, training and materials fraud: Tube, boards, fittings and harnesses are portable and valuable, while forged competence cards or counterfeit products can turn commercial fraud into a safety risk.

Labour supply chain and CIS fraud: HMRC advises construction businesses to be alert to labour suppliers with little trading history, no physical address, inconsistent paperwork, unusually long chains or prices that look too good to be true.

The cost of fraud

The immediate cost is financial: stolen payments, replacement materials, legal fees and higher insurance premiums. But the wider damage can be worse, from project delays and strained client relationships to reputational harm and cashflow pressure.

There are regulatory implications too. Under the Economic Crime and Corporate Transparency Act, larger organisations face a new ‘failure to prevent fraud’ offence, while clients, principal contractors and insurers are increasingly likely to expect stronger controls from subcontractors.

Expert-backed prevention measures

The strongest controls are usually practical. If a supplier says their bank details have changed, do not rely on the email. Call a known contact using a number already held on file. For large payments, consider sending a small test amount and confirming receipt before transferring the balance.

In purchasing and finance, separate duties wherever possible. Match purchase orders, delivery notes, subcontractor applications and invoices before payment, and review duplicate invoice numbers, round-sum charges and suppliers with similar names. Maggio recommends dual approval for payments and monthly reconciliation so transactions can be cross-checked before problems escalate.

Internal policy is just as important as technology. “Provide all employees with some cyber and crime fraud training so there is awareness of what to look for,” Maggio says. “Ensure internal policies are in place to audit suppliers and only authorise changes with director sign-off.”

For labour, keep clean records. Site sign-in sheets, inductions, supervisor approvals and agency invoices should reconcile with timesheets and payroll. Labour providers should be checked for trading history, VAT registration, contracts and payment arrangements.

For equipment and vehicles, record what leaves the yard, where it goes, who signs for it and when it returns. Stock checks, site audits, trackers and dashcams can deter theft, identify weak points and defend disputed claims.

Insurance can provide another layer of protection. Fidelity guarantee cover can respond to dishonest acts by employees, while cyber insurance may help with compromised systems. But prevention remains the priority: clear processes, prompt reporting and a culture where staff can challenge unusual requests.

Fraud in scaffolding is not just an accounts problem. It can affect safety, compliance, reputation and the ability to keep projects moving. The best-protected businesses build a culture of verification, record-keeping and challenge. In a sector where speed matters, a short pause before money, materials or labour are committed can make all the difference.