Jersey Consumer Council

Consumer News

Direct Debit Bandits at Bay

October 23, 2015 Banking No Comments

Danger: Direct Debit Bandits at Bay

Have you checked your statements lately?

When was the last time you checked your bank statements? Are you aware of all the direct debits you currently have set up? And did you know that ANYONE can initiate a direct debit on your account, so long as they have the correct sort code and account number?

Theft through fraudulent direct debits is becoming an increasing problem and it is estimated that well over 100,000 Britons have fallen victim. Back in 2010 (interestingly, the most recent statistics we could find), insurance group LV= found that direct debit (DD) fraud accounted for over 10% of ALL identity theft.

LV= estimated that during 2013 alone there would be 41,000 cases of people being targeted in this way and they also found that, on average, victims lost £540 to the scammers, before they noticed – that equates to at least £22 million worth of theft in just one year! (Have you stopped reading this article and checked your statements yet?)

You will probably be as surprised as we were to learn that, according to BACS (the organisation which runs the DD system in the UK), a DD is set up when your bank simply receives an instruction with the correct combination of sort code and account number – at no point does anyone check that the name on the account is correct, which in many fraudulent cases would raise the alarm! DDs are sucked out of your account by the payee’s bank, whereas standing orders, are sent BY your bank and are therefore the safer option of the two.

Occasionally, erroneous DDs are set up because of the slip of a digit when completing a DD instruction, but mostly they have been initiated by fraudsters who have got their hands on your details – never leave your bills and paperwork lying around!

Sometimes, they contact you by telephone or in writing, claiming to be one of the organisations with whom you have an existing DD. They then ask you to update the bank account to which your DD is sent – providing you with new account details. A phone call/letter or email like this should set your alarm bells clanging and you should always call back your usual contact with the organisation concerned, to check that the request is genuine. Otherwise, the first you’ll know of it, is when your real payee notifies you that your DD has been cancelled – which could have huge implications, especially if it is for something like insurance and you need to make a claim.

The worst of it is, that lots of us are just letting them get away with it, because we so rarely check our statements to notice that we’re being robbed (surely you’ve got your statements out by now and are going through them line by line?)!

The good news is that where fraud has occurred, following a verifying investigation, in most cases a full refund will be offered under the DD guarantee system. If you think that you have been a victim, phone your bank immediately to report the unauthorised payments and they will advise you on how to proceed.

For more information on your DD rights, check out

And finally, what about the DDs which you set up months, or even years ago – things like memberships and subscriptions; mobile phone payments or insurance on white goods. Did you ever get around to cancelling them? One man was paying £16 a month unnecessarily – not a huge sum, but it was for six years – wasting a whopping £1,600! Ouch.

You’d better go and check your statements now – just in case!


Article references:

BBC News Online

Financial Ombudsman Service

Action Fraud (for reporting fraud and internet crime)


Comments are closed.