Question to the HM Treasury:

To ask Her Majesty's Government what is their estimate of how many Direct Debits are set up fraudulently each year through the Automated Direct Debit Instruction Service (AUDDIS); what assessment they have made of whether AUDDIS offers sufficient security against the establishment of fraudulent Direct Debits; and what assessment they have made of the effectiveness of any sanctions in place for AUDDIS originators found to be responsible for repeated fraud attempts.

This question was answered on 13th December 2021
The Bacs Direct Debit scheme is operated by Pay.UK, a private sector payment system operator. Bacs has been recognised and designated by HM Treasury and is subject to the regulatory oversight of the Bank of England and the Payment Systems Regulator respectively. Refund requests under the Direct Debit Guarantee, including where fraud is suspected, are made on a small proportion of all direct debits collected. In order to receive Direct Debit payments, businesses and other organisations must be ‘sponsored’ by a Payment Service Provider that participates in Bacs (usually their bank). Businesses undergo stringent checks to ensure their identity and that they understand their responsibilities and obligations when using the Direct Debit scheme.

Pay.UK also has a range of sanctions available to them that can be used against businesses that do not comply with the Bacs rules, ultimately including removing them from the service altogether if necessary.