Fraud risk is increasing for charities warns regulator

The Charity Commission has urged good causes to review their financial controls so they don’t fall prey to mandate fraud.

This is where fraudsters try to persuade charities to change direct debits or standing orders by impersonating legitimate organisations.

The regulator has warned that the number of such incidents is on the rise and has become aware of several attempts in the last few months alone.

Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said: “The mandate fraud cases we hear about increasingly involve cunning tactics by fraudsters to gain the trust and confidence of their victims. There’s no doubt that fraud and deception tactics will keep on evolving. Awareness of fraud risk and the tactics used by fraudsters is the most effective way of preventing charities from becoming victims.

“At the heart of charity is trust, but when it comes to control of charity finances, it’s crucial that vigilance and caution are the key watchwords.

“It is also a timely reminder for trustees and senior charity staff to reflect on how fraud-aware their employees and volunteers are, and to review their charity’s financial controls.”

In many of the cases highlighted by the Charity Commission, the fraudster had been able to use the email address of a regular contact at a legitimate organisation to deceive charities into changing their bank details.

This type of fraud can also involve the fraudster impersonating an organisation by using direct mail, including the use of headed paper and a company logo to lend credibility to the attempt.

The Commission said that the threat of mandate fraud is an ongoing issue for charities, with cases continuing to be reported to be reported to Action Fraud from across the sector.

The Metropolitan Police advises charities that any request to change bank account details should be treated with suspicion.

It says that charities should check and verify all requests for change of bank details using contact information held separately by the charity.

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