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Recognising donation fraud - avoiding financial losses: Better protection for organisations in the social economy

Donation fraud can be perpetrated by both fundraisers and donors themselves. While there are often public reports of fake fundraisers pretending to act on behalf of charitable organisations, there are also cases in which dubious donors try to scam money or wrongly keep it for themselves by providing false information or claiming it back. Recently, a new scam has emerged that we would like to warn you about.

Many organisations in the social economy are grateful for every donation that helps them to fulfil their tasks. This is why it should be made particularly easy for potential donors. It is often possible to fill in a direct debit mandate online directly on the organisation's website - that's all the donor has to do. The organisation can then debit the money directly from the donor's account on the specified due date.

However, caution is advised here: If the donor then contacts the organisation afterwards because he/she supposedly made a mistake when completing the direct debit, has therefore donated too much and asks for a partial refund.

The following case has already occurred with several of our customers:

A donation totalling 8,900 euros was debited from the supposed donor with the direct debit. The donor contacted us shortly afterwards by e-mail and said that he had mistyped the amount and only wanted to donate the still considerable sum of 890 euros. He asked for a prompt refund of 8,010 euros, which the organisation quickly complied with. Shortly after the requested amount was transferred back, the alleged donor cancelled his direct debit, which resulted in the total amount being reversed. Upon enquiry, the banks involved and the police informed us that the outgoing account had been cleared immediately and that the alleged donor could no longer be identified. In this case, our customer suffered a financial loss of 8,010 euros.

Tips for protection

In Germany, direct debits can be cancelled up to eight weeks after the amount has been debited. A chargeback is then made to the original account, against which the original recipient cannot do anything. "If you receive a request for a partial refund of an amount, please check by when the donation can be reversed," explains Marius Reddig, Team Leader Financial Lines Property Damage at the Ecclesia Group. "If you want to be on the safe side, you should wait eight weeks after the booking and only then make a partial refund. You should also check whether you have financial loss liability and/or fidelity insurance that could cover such an event."