Any request to change bank account details is an unusual occurrence and should be treated with suspicion, says the charities watchdog.
The Charity Commission, the regulator of charities in England and Wales, is urging charities to remain vigilant to the continuing threat of mandate fraud and the changing tactics of fraudsters who target charities.
Mandate fraud occurs when the fraudster tricks a victim into changing bank account details, to divert legitimate payments intended for a genuine organisation (such as a charity supplier) to bank accounts instead controlled by fraudsters. This often involves the fraudster impersonating an organisation representative, by email, direct mail or ‘phone. The fraudster may also use headed paper and/or the company logo to lend credibility and to gain the charity’s trust.
In recent months, the commission says that it has become aware of mandate fraud attempts where the fraudster has been able to use the email address of a regular contact at the legitimate organisation to deceive charities into changing change bank details.
The commission recommends that trustees and charity professionals familiarise themselves with the Metropolitan Police’s mandate fraud advice and ensure that their charity has authorisation and monitoring procedures in place for changing bank details and managing payments.
As a minimum, charities should:
remain vigilant to the continuing risk of mandate fraud and raise awareness amongst those staff and volunteers with responsibility for charity finances – download the campaign posters produced by the Metropolitan Police
be suspicious of any change of bank detail requests until independently verified
check and verify all requests for change of bank details using contact information held separately by the charity
never rely solely on contact information provided in any form of external communication that requests a change of bank details
check that a sample of payments has been received by the legitimate organisation after the change of bank details has been actioned
do not rely solely on the organisation to inform your charity that legitimate payments have not been received – by then it may be too late to recover the money.
Michelle Russell, Director of Investigations, Monitoring and Enforcement at the 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.”
