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The Charity Commission is warning trustees and donors to strengthen defences as it fears the pandemic has created environments that are enabling charity fraud.
Charities have reported being victims of fraud or cyber crime 645 times since the start of the pandemic in March, amounting to £3.6 million in total losses to charities, with the Charity Commission warning that the true scale of fraud against charities is believed to be much higher.
The regulator is concerned that remote working and virtual activities and sign-off processes, combined with charities’ tendencies to place goodwill and trust in individuals, may make them especially vulnerable. It says that charities providing services and supporting local communities could be among those at risk after earlier reports of criminals using PPE as a lure in scams.
"We are seeing evidence that opportunists may be taking advantage of charities during the pandemic and I urge all charities to be extra vigilant against fraud," said Helen Stephenson, chief executive of the Charity Commission.
Analysis of frauds reported to the commission has found that in some cases fraudsters have preyed on people’s fear and anxieties.
In one case, the regulator saw a fraudster using a beneficiary’s story of personal struggle during the pandemic to pressure a charity into making a payment quickly. The regulator also considers that economic hardship may have increased perpetrators’ temptation to commit fraud, particularly in cases of insider fraud.
"Charity brings immense value to society, not just through the good work charities do directly, but also in its power to promote cohesion, wellbeing, and pride in our society. This is more important than ever, so the fact that there are those who wish to exploit public generosity and charitable endeavour for selfish, criminal purposes is appalling," said Ms Stephenson.
"Combating fraud is vital to giving people confidence that their money is safe and will go to the causes they care so deeply about."
Research by the commission has found that nearly three-quarters (73 per cent) of charities affected by fraud go on to change their procedures or enhance internal controls to avoid future frauds. The same survey also found that two-thirds of frauds are picked up by financial controls or audit, so the regulator said that some simple checks and controls, together with a strong counter-fraud culture, can be key to disarming fraudsters.