The Charity Commission has today warned charities to be extra vigilant about the risk of mandate fraud, where criminals impersonate legitimate organisations to obtain bank details.

The regulator today published a warning for charities after becoming aware in recent months 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 bank details.

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.”

She added that it is 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”.

Mandate fraud occurs when the fraudster tricks a victim into changing bank account details, in order to divert legitimate payments intended for a genuine organisation – such as a charity supplier – to bank accounts controlled by fraudsters. This can often involve the fraudster impersonating an organisation representative, either by email, direct mail or telephone. The Commission said that fraudsters often use headed paper, as well as the company logo to lend credibility.

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.

Charities are being recommended to familiarise themselves with the Metropolitan Police’s advice on mandate fraud, which makes clear that any request to change bank account details is an unusual occurrence and should be treated with suspicion.

Advice for charities

The Commission has asked charities to remain vigilant of the risk of mandate fraud, and raise awareness with staff and volunteers who have responsibility for charity finances. It also tells charities to be suspicious of any change of bank detail requests until independently verified.

It says that charities should check and verify all requests for change of bank details using contact information held separately by the charity, and never to solely rely on contact information provided in any form of external communication that requests a change of bank details.

It also asks that charities check that a sample of payments has been received by the legitimate organisation after the change of bank details has been actioned, and that they do not rely solely on the organisation to inform the charity that legitimate payments have not been received - by then it may be too late to recover the money.