Direct Debit fraud is the common form of “Mandate fraud” which is the name for when someone gets you to change a direct debit, standing order or bank transfer mandate, by falsely claiming to be an organisation you make regular payments to. It’s also known as payment diversion fraud.
This can take place over the phone, by post or email and is used to defraud businesses and the public.
How Does Mandate Fraud Happen?
- You receive a letter or email or text message that claims to be a company supplying a monthly subscription for you. It provides details of the company’s new bank account and asks you to change the direct debit or mandate of payment accordingly.
- You make the changes and next month receive an overdue statement from that company as you haven’t paid them.
- Your online bank account has been hacked into by a fraudster and monthly payment details are altered so that the money is transferred to the fraudsters account.
In that case, the sum of money may be quite small, but this scam also applies to much larger considerations. Even if the notification of change of bank details seems to be from the appropriate person, you must check before taking action.
How to Prevent Business Mandate Fraud
- Educate all staff about this type of fraud
- Enable staff to properly verify contact from senior management
- Always review financial transactions to check for inconsistencies/errors, such as misspelt company name
- If a company notifies you of a bank account change then verify that change directly using the contact details you already have
- Question when the delivery address differs from the historical ones
- Check your bank statements regularly for any suspicious transactions. If you notice anything unusual, notify your bank immediately
If you have any experiences with scammers, spammers or time-wasters do let me know, by email.
