Direct debit pulls money directly from your customer’s bank account to make a payment. This process is useful for recurring payments, such as regular bills. While this method is convenient for the biller and the customer, there is the potential for direct debit fraud.

 

How Does Direct Debit Fraud Work

 

Direct debit fraud can take place in several ways. It’s often associated with identity theft, where the scammer gains access to the bank account information by posing as the victim. They can pay for services and products via a direct debit option and use this account until its owner notices. Some people don’t check their bank statements that often, so this could go on for weeks, months or even years.

Some consumers get asked for their bank account information over the phone, via email or through messenger services. They may think that they’re giving their details for a legitimate purpose, but they actually were tricked by a criminal.

 

How to Avoid Direct Debit Fraud

 

You have a few ways to limit the chances that you end up becoming the victim of this type of fraud. Never give bank account information or the numbers on your checks without verifying that you’re talking to a valid company. They might sound convincing, but when you pay close attention, you can often pick out the red flags that signal something’s wrong.

Check your business bank account on a regular basis and note any transactions that don’t look valid. While they may be purchases that you forgot, they could also be signs that someone is creating direct debits to your account. Talk to your bank as soon as you see any activity that you don’t expect. A proactive approach helps you limit the financial damage that could occur.

If your customers report direct debit fraud occurring after doing business with you, make sure that you don’t have any scammers in your company. Someone may lie to consumers and say that they have to provide bank account information to complete purchases. Get the authorities involved if you have a solid lead.

Direct debit fraud is a frustrating situation to deal with. No protection method keeps you 100 percent safe, but these tips can make you a harder target to scam. Don’t let unsavory criminals impact your business through this damaging tactic.