Charity Commission warning over school payment frauds

The Charity Commission has issued a formal alert about the dangers of payment diversion fraud in the independent schools sector, based on reports made in the past month to Action Fraud, the UK’s national fraud reporting centre

Some independent schools have charitable status, which is why the regulator has taken action. It says fraudsters are placing themselves in the middle of transactions between parents and schools. The fraudster contacts the parents outlining details and payment instructions for the latest school fees. Initial contact appears to primarily be made via email and often from the school’s own compromised email system.

However, the National Fraud Investigation Bureau (NFIB) has also seen instances where the email address used is similar to that of the school, for example using ‘nn’ instead of an ‘m’.

The victim then makes the required payment into the bank account, which is in the control of the fraudster. By the time the fraud has been identified, the funds have already disappeared.

In several instances there has been a strong element of manipulation to the scam, with fraudsters building trust with victims through contact by phone, email or other direct messaging. Often, the fraudulent email promises a discount for early fee payments.

The Commission has published prevention advice for schools and parents on its website, which includes making sure everyone is aware of the fraudulent methods and of cyber-protection protocols; checking emails for inconsistencies or grammatical errors; and not opening links from unknown sources. It says parents should not be afraid to challenge requests for payment, particularly if the amounts involved change.

The Commission says schools should also consider using a ‘payment gateway’ for the receipt of funds from parents, and to help combat ‘typo squatting’, should also consider registering similar domain names.

Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said: ‘We are urging all charitable schools and parents to be alert to this. If they suspect they’ve fallen victim to payment diversion fraud, they should report this immediately to Action Fraud, and to the Commission, under its serious incident reporting regime.’

Julie Robinson, General Secretary of The Independent Schools Council, added: ‘Schools and fee-paying parents have been targeted by fraudsters posing as school accounts departments seeking alternative payment arrangements. We are supporting the Charity Commission in raising awareness among schools and parents, and we urge institutions to alert their stakeholders to this unlawful activity.’

Report by Pat Sweet

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