Mandate and cheque fraud

Mandate fraud: direct debits, standing orders and bank transfers

Mandate fraud is where someone tricks you into changing details of a direct debit, standing order or bank transfer by pretending to be an organisation you make regular payments to. Examples include a business supplier or a subscription.

It’s a simple but effective fraud and is used a lot. Scammers can easily steal a huge amount of money.

Examples of mandate fraud

Someone contacts your business pretending to be one of your suppliers. They say their bank details have changed so you need to amend their account to reflect this. You make the change.

But the next month the genuine supplier asks what’s happened to your monthly payment. You realise you’ve been a victim of fraud.

In another situation, someone contacts your business pretending to be from an organisation you have a standing order with. They ask you to change an order to reflect a change in their banking.

You make the change to the standing order mandate, but next month the actual organisation doesn’t deliver your products, or a membership is cancelled, as they didn’t get paid.

Alternatively, your business gets a letter that appears to be from a company that sends you a monthly magazine. It provides details of a new bank account and asks you to change the payment details to this account.

Next month your magazine doesn’t arrive. Its publisher says that because you cancelled the payment, they cancelled the subscription. Finally, your business online bank account is hacked and monthly payment details altered, so money is transferred into a fraudster’s account.

Minimise your risk to mandate fraud

Don’t simply rely on emails or mobile-phone calls. Verify and corroborate any request to change suppliers’ bank details.

Always use contacts you already have on file to verify changes to financial arrangements with the organisation directly.

Maintain records of standing orders and direct debits.

Keep bills and other business documents in a secure place to prevent information falling into the wrong hands.

Check your bank statements carefully for anything suspicious.

Tell your bank straight away if you see any unusual activity on your account.

For more information and help or to report this and many other types of fraud, go to Action Fraud, the UK’s national fraud and cybercrime reporting centre.

Cheque fraud

Genuine cheques from your own company, customers or suppliers can be stolen, altered and presented, or counterfeited and presented.

What you should know

Only accept cheques from people you know and trust.

Don’t release goods until you’re sure that the funds are yours.

Find out the average clearing times for cheques at the Cheque and Credit Clearing Company.

Don’t accept cheques for a higher amount than you’re expecting.

Be particularly cautious with new customers who:

• place large orders
• make overpayments and then request refunds
• ask for immediate delivery
• change their delivery address after they place the order

This last method is often used in job vacancy scams or goods and services sold through classified adverts.

Minimise your risk of cheque fraud

Always use indelible ink-based pens or black or blue ballpoints pens on cheques. If you enter details with a printer, make sure you use approved machines and toners. This makes it harder to alter or erase the writing. Find a list of approved machines at the Cheque and Credit Clearing Company.

Cross through with a pen any blank spaces on cheques; after the payee name and after the payment amount written in words, for example. If you use a computer, make sure the software fills in any blank spaces with asterisk (*) symbols.

Don’t leave large spaces between words. Make sure the machine uses ‘zero’ instead of ‘nil’, which can easily be changed fraudulently to ‘nine’.

If a new cheque book is due and it doesn’t arrive, contact your bank. Consider collecting business cheques from the bank as they can be stolen from the postal system.

Check your bank statements regularly to keep track of cheque payments.

Avoid using just one signatory within your business, so others can pick up discrepancies.

For more information and help or to report this and many other types of fraud, go to Action Fraud, the UK’s national fraud and cybercrime reporting centre.