The acquisitive group owns the Nettl branding, marketing and print business alongside seven other specialist vertical software companies.
In a Stock Exchange announcement this morning (22 May), AIM-listed Software Circle disclosed that one of its operating units “has been the victim of a suspected authorised push payment fraud which has resulted in £426,770 being inadvertently sent from the business unit's bank account”.
It did not name the business that made the payment.
Authorised push payment (APP) fraud involves fraudsters tricking their victims into willingly making large bank transfers.
Software Circle said the incident was identified shortly after the transaction had been made, and immediate action was taken to notify the bank and law enforcement.
A specialist team at the group's bank is investigating the matter.
“We can confirm that this incident was limited in scope, and there is no evidence of a wider breach of the group's systems or data,” Software Circle said.
“The board takes this matter extremely seriously. A full internal review is being conducted, and steps have been taken to reinforce awareness of, and strengthen, payment protocols across the group. This includes additional employee training, stricter multi-level verification procedures and enhanced fraud detection measures.”
CEO Gavin Cockerill told Printweek it was not clear whether the money could be recovered, or not.
“The investigation with the bank is ongoing. Timeframe and potential recovery amount is currently not known,” he said.
The group acknowledged that the amount involved was “significant” but its financial position remained strong, with cash of around £7.8m.
All of Software Circle's business activities continue as normal.
The group will update on its financial year ended 31 March in the coming weeks.
According to UK Finance's Annual Fraud Report, thousands of individuals fall victim to APP scams every year, with £459.7m lost due to the fraud in 2023. Although the monetary value fell by 5%, the number of cases increased by 12% to 232,429.
The Payment Systems Regulator and the Bank of England introduced a mandatory reimbursement scheme for victims of APP fraud last year, which came into effect on 7 October 2024. The protections apply to individuals, microenterprises and charities. The maximum claim for consumers is £85,000.
Shares in Software Circle, which have been on an upward trend since the start of the year, fell by 5.76% on the news to 27.80p (52-week high: 32.40p, low: 15.30p).
Software Circle posted sales up 38% to £16.2m in the year to 31 March 2024, but filed a £2.4m loss due to impairment charges associated with the sale of now-defunct Works Manchester to Rymack Sign Solutions/PFI Group.
