Charity fraud up by £400m in a year, say latest estimates

The Annual Fraud Indicator 2017 says much of the increase is down to a large rise in procurement fraud, to almost £1.2bn

Fraud against charities has increased by £400m over the past 12 months and is now worth about £2.3bn, the latest estimates show.

The Annual Fraud Indicator 2017, which has been published today by the UK Fraud Costs Measurement Committee based on research by the accountancy firm Crowe Clark Whitehill, the credit rating agency Experian and the University of Portsmouth’s Centre for Counter Fraud Studies, says that a large increase in procurement fraud to almost £1.2bn was a major reason for this rise.

Payroll fraud also increased by £4m to £990m, the report says. In contrast, the report says, grant fraud fell by £35m to £161m.

Total annual fraud losses in the UK were assessed as being worth about the same as the previous year, about £190bn, says today’s report, with three-quarters of this affecting the private sector.

The report says that fraud affecting charities accounted for 1.2 per cent of the total fraud in the UK.

The publication highlights how new technology has been exploited to perpetrate frauds across all sectors, with online banking fraud having grown by 226 per cent and telephone banking fraud by 178 per cent in the past year.

Individual people were defrauded of £6.8bn last year, the report says, which is more than twice the amount of fraud in the charity sector, and public sector fraud losses were £40.4bn.

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The report comes after a number of high-profile frauds in the charity sector, including a £500,000 “vishing and spoofing” fraud against Highland Hospice in Scotland in July.

In another case, Bury Hospice was the victim of a “sophisticated” fraud in July involving an online virus check that resulted in the charity losing £235,000.

Figures released last month by the National Fraud Intelligence Bureau at the City of London Police showed there were 823 employee fraud cases and 298 cases of donation fraud in the past six months, with fraud being a significantly under-reported crime.

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Former Mencap PA pleads guilty to fraud at Crown Court

Asra Yildiz, 32, of Hackney in east London appeared at Blackfriars Crown Court, charged with defrauding the charity of £34,000

A former personal assistant to the chief executive of the learning disability charity Mencap has pleaded guilty to a £34,000 fraud.

Asra Yildiz, 32, from Hackney, east London, pleaded guilty at Blackfriars Crown Court last month to one count of fraud by abuse of position.

Yildiz, who was employed by the charity from 2011 until her dismissal in 2014 when the allegations came to light, was the PA to Mark Goldring, who left Mencap in 2013 to become chief executive of Oxfam, and his successor, Jan Tregelles.

It is alleged that Yildiz fraudulently spent £34,768.20 using a company credit card between 18 November 2012 and 29 April 2014.

Yildiz had originally pleaded not guilty to the offence, but changed her plea at a hearing on 20 October.

Tregelles said: “Asra Yildiz had worked at Mencap for a number of years until her dismissal in April 2014. She was in a position of trust, which she repeatedly abused by falsifying expenses and other claims for personal gain. Asra let herself, her Mencap colleagues and Mencap donors down.

“As the recent fraud report produced by the Charity Commission made clear, every charity needs to be alert to insider fraud.”

Yildiz will be sentenced next week.

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Regulators meet online giving platforms to discuss fraud prevention

The Charity Commission and the Fundraising Regulator are meeting representatives from 14 of the biggest operators, including JustGiving and Virgin Money Giving, to agree principles

The Charity Commission and the Fundraising Regulator are meeting senior representatives from online giving platforms to discuss issues such as how to combat fraud.

The meeting, which is taking place today, brings the regulators together with 14 of the biggest fundraising platforms, including JustGiving, BT MyDonate, GoFundMe and Virgin Money Giving.

In a statement, the commission said: “The aim of the summit is to collectively agree some principles that will ensure individuals are supported when setting up or donating to online appeals, help to increase public trust and confidence in charity and online giving, and ensure that charitable resources in the short, medium and long-term are used as effectively as possible.”

The commission said these issues were especially important in the wake of the terrorist attacks in the UK this year and the Grenfell Tower fire, which prompted the public raise to more than £38m for those affected, largely through online fundraising platforms.

But concerns were raised about the veracity of some of the fundraising pages. In April, JustGiving seized control of a fundraising page on its site that purported to have been set up in memory of Aysha Frade, who was killed the previous month in the terrorist attack on Westminster, after users spotted it had been started by a woman who had the same name as someone convicted of fraud.

Attendees at the meeting will discuss how to protect charitable funds from fraud or misrepresentation, how to ensure individuals understand the responsibility they are taking on in setting up a fundraising page and are supported to do so, and how to provide transparent information about fees and the amount of money will go to the platforms themselves.

The meeting will also explore whether the self-regulatory regime set out in the Code of Fundraising Practice was the appropriate way to assure the public and parliament that major giving platforms were adhering to high standards and transparency, the commission statement said.

Online platforms that allow private individuals to collect donations for their chosen causes and share their fundraising appeals with friends and family have become increasingly popular. JustGiving’s chief operating officer, Charlie Wells, predicts that online donations will represent 50 per cent of online giving by 2020.

Jo Barnett, executive director at Virgin Money Giving, told Third Sector the platform was aware of the importance of keeping charitable donations safe.

“The key thing we would like to see progressed through the summit is an understanding of how fundraising platforms can work together to provide greater transparency, minimise fraud and support charities in driving up new income,” she said.

Helen Stephenson, chief executive of the Charity Commission, said the emergence of new crowdfunding and online giving sites had had a positive impact on charitable giving in the UK and she hoped the meeting would allow the organisations involved to build on this success and to identify what steps were needed in the future.

“We want to ensure that the public are sufficiently informed about online giving and can set up appeals and donate with confidence,” she said.

Stephen Dunmore, chief executive of the Fundraising Regulator, said it was important that online platform operators supported both the legal requirements and the good practice set out in the Code of Fundraising Practice.

“We look forward to building good working relationships with the online platforms to ensure that they support the code and can help develop it in future, as well as to assure the public that they can donate safely when they use the platform of their choice,” he said.

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Highland Hospice loses £500k to ‘vishing and spoofing fraud’

Highlands and Islands Police are investigating a number of incidents in which fraudsters posed as bank representatives to make victims hand over financial information

A Scottish hospice has lost approximately £500,000 to a cyber crime, police have confirmed.

Highland Hospice lost the money in a “vishing and spoofing fraud”, the Highland and Islands Police Division said in a statement.

Vishing is where a fraudster makes a telephone call posing as a bank representative to persuade the victim to hand over financial information.

The police statement said the hospice was one of a number of victims in the Highlands and the fraudsters had stolen a total of £2.5m between 19 July and 30 July from businesses in the region.

The police said they were aware of other attempts to defraud hospices in recent weeks, but they had not established if these cases were linked.

Last month, Bury Hospice lost £235,000 in an “elaborate” fraud involving an online virus check, and said other charities in Greater Manchester had been targeted in a similar way.

Bolton Hospice also narrowly avoided a “sophisticated fraud” last month that involved contacting a major supplier and having the hospice’s bank’s phone number appear on the caller display.

Kenny Steele, chief executive of Highland Hospice, said: “Although this is a horrendous situation, it will not have an immediate impact on operations. There is resilience built into the hospice financial systems to cope with these types of risk to ensure that our top priority of patient and family care and wellbeing is protected.

“We have put in additional security measures and are working with the police and banking authorities to work on recovery of the funds and track the perpetrators. We also hope that releasing this information will help to protect other businesses in the area.”

Detective Inspector Iain McPhail, from the Economic Crime and Financial Investigation Unit at Police Scotland, said the force was carrying out a thorough investigation of the incident.

He said some of the money had been recovered and police were working to recover the rest of the stolen funds.

“I would again urge people to be on their guard against unsolicited calls from someone claiming to be from their bank,” he said.

“Always double-check numbers you’re given to call back to or call through the main customer care number for the organisation and ask to be put through.

“If you decide to ring back and verify the call, it is advisable to do so on a different phone line, such as another landline or your mobile. If you are still unsure, consider visiting your local branch instead of speaking to someone over the phone.”

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Charity Finance Group launches Counter Fraud Pledge

The Charity Finance Group is calling on charities to take a pledge aimed at reducing fraud in the voluntary sector.

The umbrella body said charities could not be completely immune to fraud, but they could take steps to minimise the risks and reduce the estimated £1.9bn a year the sector loses to it.

The Counter Fraud Pledge focuses on six promises, including that each signatory will create fraud policy, assess each year how well the policy is working and appoint a key person to be responsible for fraud.

Organisations that sign the pledge will be able to use a badge on their website to show people that the charity is doing what it can to protect its assets.

Heather McLoughlin, policy and public affairs officer at the Charity Finance Group, said fraud was one of the biggest challenges facing charities.

She said that although many charities had robust counter-fraud policies, others were still grappling with the issue.

“Our hope is that the Counter Fraud Pledge will increase awareness of fraud and how to tackle it,” she said.

“We also believe it will demonstrate to beneficiaries, funders and the people who support and donate to charities, that charities do take the threat seriously and are actively working to safeguard their organisations’ assets and reputation.”

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Former charity treasurer pleads guilty to £200k fraud

Dial Lowestoft and Waveney says it almost had to shut down because of the crime, which was carried out over more than six years

A former treasurer of a Suffolk-based disability charity has pleaded guilty to a £212,000 fraud against the organisation.

Neil Payne, 51, from Lowestoft, Suffolk, pleaded guilty at Ipswich Crown Court on Wednesday to one count of fraud by abuse of position during his time as treasurer of Dial Lowestoft and Waveney.

According to a statement from the charity, Payne defrauded it of £212,639.52 between 2010 and January this year.

The statement from the 31-year-old charity said the fraud almost caused it to close.

David Savill, service manager at Dial, said: “There was a risk it could have closed. But the trustees and employees decided very early on that we wanted to keep going it going.

“We are finding just enough funds to keep going, but in the coming months the Charity Commission will require us to build up our reserves.

“If the charity was not here, a lot of people would not have access to the assistance they are entitled to.”

But Savill said that the charity still had “less than half of the £120,000 it requires to operate each year”.

According to the charity’s entry on the Charity Commission website, Dial had an income of £137,266 and spent £119,288 in the year to 3 October 2016.

Payne will be sentenced on 6 July.

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