A story on BBC radio 4’s Moneybox yesterday involved an elderly woman with dementia who was defrauded out of £14,000 through direct debits.
How did it happen and what rights do you have if you’re defrauded by direct debit?
How the fraud was discovered
One of Moneybox’s listeners, who they called Sue (not her real name) found that fraudsters had taken £14,000 from her mother. Her mother had moved to a nursing home in 2010 because of her dementia, and three fraudulent direct debits were set up in 2013, when she could no longer care for herself, never mind look after her finances.
The fraud wasn’t discovered until 2017, after Sue’s mum died. By then, £14,000 had been paid out by the fraudulent direct debits. Lloyds Bank (which Sue’s mum banked with) said that the direct debits had been set up legitimately. This was despite the fact that Sue had told Lloyds Bank that her mother was unable to feed herself or go to the bathroom. Still Lloyds said that the direct debits had been set up by Sue’s mum.
Vodafone, which received most of the money from the direct debits, said it couldn’t tell Sue whose phone the direct debits were paying for, because of ‘data protection’ rules.
How the fraud happened
Although there are checks in place when someone sets up a fraud, it appears (according to Vodafone) that someone can then – fairly easily – change the account that the direct debit comes from. That makes sense because people switch bank accounts from time to time, so it should be possible for them to change the account that their payment comes from.
However, there’s obviously something going wrong if a fraudster can switch the payment so it comes from someone else’s account entirely.
The direct debit guarantee
If you set up a direct debit, you’re automatically protected by a ‘direct debit guarantee’ that says you’ll get your money back if a direct debit has been set up in error or the wrong amount has been taken, you can get a refund straight away from your bank or building society. Find out more about the Direct Debit guarantee here.
It doesn’t matter whether it’s a mistake by your bank or the organisation you’re paying, it’s still the bank that must refund your money.
However, what seems to have happened here is that the original direct debit was set up correctly by the fraudster, who then switched the paying bank so the money came from Sue’s mum’s account.
What banks should do
Banks should have good processes in place to help customers with conditions like dementia. Check with yours to see what measures it has in place to help vulnerable customers.
If you’ve had a similar experience to Sue’s, there are two organisations it may be worth contacting: the Financial Ombudsman Service and Action on Elder Abuse. The Financial Ombudsman Service is a free to use complaints service if you’re not happy with the way a financial company has handled your complaint. You can get in touch with the service here.
Hourglass is a charity that specialises in highlighting and advising on elder abuse – both financial and physical. Find out more here. It has a confidential helpline that you can call for advice on 0808 808 8141.