Charities urged to step up security after a record £8.6m lost to fraud
A lot of homeowners only install burglar alarms after they’ve been burgled. Similarly, a lot of charities fail to invest in fraud training and cyber security until they’ve been hacked.
Have you taken steps to protect your charity? If not, can you afford to wait? Not if the latest data by Action Fraud is anything to go by.
According to the UK's National Reporting Centre for Fraud and Cybercrime, during the last financial year, charities in the UK lost a staggering £8.6 million through online crime with 1,059 incidents of fraud reported by charities between April 2020 to March 2021.
This shocking figure (which is likely to be much higher as fraud often goes under-reported), was a result of fraudsters exploiting the Covid-19 pandemic.
Fraudsters used a number of scams to defraud charities, such as:
Scam emails (‘phishing’)
Fraudsters claiming to be from legitimate organisations offer to provide information that could be of assistance to charities, such as a list of ‘at-risk’ elderly people in a local community who may require support from the charity.
The member of staff has to click on a link to get the information, which takes them to a fake website, where they are then asked to make a payment.
Advice: Don’t click on links or attachments in unexpected or suspicious emails. And NEVER respond to unsolicited messages or phone calls that ask for your personal or financial details.
If in doubt, report suspicious messages to the Suspicious Email Reporting Service (SERS): report@phishing.gov.uk
Procurement fraud
Some scams involve the online sale of personal protective equipment (PPE), such as face masks and gloves.
In some cases, once the payment has been made, no products are delivered or the products do not meet the required standards.
Advice: Carry out due diligence if you’re making a purchase on behalf of your charity from a company or person you do not know.
Unsolicited offers of goods, services or financial support (advanced fee fraud)
Some fraudsters made unsolicited offers of goods or other financial support in return for an advanced fee from charities.
Advice: Just because someone has your contact details, it doesn’t mean they’re genuine. Don’t be rushed or pressured into making a decision that could harm your charity or your beneficiaries.
Sign up to the ‘Stop Fraud’ pledge
In response to the sharp rise in cybercrime, the charity commission is urging charities to be vigilant and sign up to a new Stop Fraud Pledge, which asks them to commit to taking six practical steps to reduce the chance of falling victim to fraud – namely:
Appoint a suitable person to champion counter-fraud work throughout your organisation.
Ensure that all trustees are aware of their legal duty to protect the charity’s assets.
Consult with staff, volunteers, and trustees to identify the types of fraud that pose a threat and brainstorm ways you can prevent them.
Create a written fraud policy and share it with staff, so everyone understands what fraud is and how they can help prevent it.
Carry out checks on the organisations with whom you have a financial relationship.
Assess how well your fraud controls are working on a regular basis, taking into account new risks.
Word of warning
Helen Stephenson CBE, chief executive of the Charity Commission, said of the pledge: “Charities deliver good to so many people’s lives and help strengthen our society. When the public donates generously to charities it is because they want to make a real and positive difference to a cause they care deeply about, and they want to know their money will reach the front line. Sadly, as these figures show, there remain criminal individuals who would take advantage of organisations that seek to do good and of those that generously donate.
That is why I am calling on all charities to take the risk of fraud seriously by signing up to our new Stop Fraud Pledge and taking six simple steps to protect their charity. Combating fraud gives the public confidence that their money is safe, protects vital funds for charities, and helps maintain trust in the charities we all care so passionately about.”
Don’t be a victim
With a total annual income of over £69 billion, the charity sector is vulnerable to fraud and financial crime. And with more people working from home, the risk to valuable funds and sensitive data is higher than ever.
If your charity has been a victim of fraud or cybercrime, report it to:
Read the Commission’s guidance for information and advice about how to protect your charity from fraud and cybercrime.
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