# Charity Commission warns charities of direct debit fraud scams

- Link: https://fundraising.co.uk/2010/01/21/charity-commission-warns-charities-direct-debit-fraud-scams/
- Published: 2010-01-21T11:40:24+00:00
- Author: Howard Lake

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:

#### Prevention

 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.

#### Detection

 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.

#### Redress

 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](http://www.bacs.co.uk/helpcentre)
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:

 * Organisations setting up non-paper Direct Debit Instructions must verify the 
   identity of the Payer prior to collecting any money; the methods used vary depending
   upon the associated commercial risk – all are agreed and approved by the organisation’s
   sponsoring bank.
 * For organisations providing services and goods, for example, Bacs makes a list
   of stringent verification measures available in a secure area of its website.
   However, for obvious reasons, and in the interest of fraud prevention, these 
   measures must remain confidential.
 * Organisations collecting by Direct Debit must also confirm, in writing, the Instruction
   given by the customer within three days of setting up the Direct Debit. Alternatively
   the organisation must write and give Advance Notice of the transaction, normally
   ten working days prior to it leaving the customer’s account. In line with standard
   banking industry recommendations, all consumers are advised to keep their personal
   details secure, regularly check their bank statements, monitor their bank balance,
   open all post and dispose of it with care.

 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](http://www.charitycommission.gov.uk/publications/cc8.asp
).
www.charitycommission.gov.uk

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