Warning about fraudulent direct debit payments

Submitted by Stephen on 29 January, 2010 - 14:16

The Charity Commission has issued the following warning about fradulent direct debit payments:

What is the issue?

The Commission has been made aware of a number of instances where fraudulent direct debits have been set up from charity bank accounts, resulting in the abuse of charity funds.

What can charities do?

  • 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.

For more information about direct debits please see the Bacs website.

For more information about charity trustees’ legal duties and responsibilities for ensuring strong financial controls please see our guidance CC8 Internal Financial Controls for Charities.