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Charity Commission warns charities of direct debit fraud scams

The Charity Commission is warning charities of the danger of fraudulent direct debits being set up from charity bank accounts. It has been made aware of a number of instances where this has happened, resulting in the abuse of charity funds.
What can charities do? The Commission is publishing the following advice for charities on its website:


Write to your bank and inform them that no further direct debits should be set up without the specific approval of certain named authorised personnel.


You should ensure that you regularly check your bank statements and ensure the bank statements reconcile with the charity records. Any unexplained or unusual direct debits must be investigated.


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Under the direct debit guarantee scheme, if the charity has been wrongly paying a direct debit, it can reclaim this money from the bank. It is then the bank’s responsibility to reclaim this money from the supplier.
A spokesperson for Bacs Payment Schemes Limited said: “Paperless Direct Debit is a highly reliable, safe and cost effective method for organisations, including charities, to collect regular payments. Instances of Direct Debit fraud are very low when compared with alternative payment methods like cheque or card.
“We treat any instances of Direct Debit fraud extremely seriously, even when they take place rarely. We are pleased to work with the Charity Commission in providing this alert to the charity sector”.
Bacs added its own advice:

The Charity Commission publishes information about charity trustees’ legal duties and responsibilities for ensuring strong financial controls in its ./guidance CC8 Internal Financial Controls for Charities.