Council urges residents to be alert to Direct Debit refund scam

Stroud District Council is urging residents to stay alert after a local person recently lost more than £3,000 to the growing scam of Direct Debit indemnity fraud. Fraudsters managed to access his bank account, reverse his rent payments and then trick him into sending the money to them.

These scams can feel very convincing – especially when money suddenly appears in your account. Some people panic because they think they shouldn’t have received extra money, especially if they get benefits. Scammers rely on that fear and pressure you to send the money on.

Please remember there’s nothing to feel embarrassed about if this happens. Criminals are very skilled at making things seem urgent and genuine.

What is Direct Debit indemnity fraud? 

In the UK, banks offer a Direct Debit Guarantee, which lets customers get an immediate refund if a Direct Debit is taken by mistake.

Fraudsters take advantage of this by:

1.  Tricking someone into sharing their bank details or screenshots of their Direct Debits

2.  Filing a false claim with the bank saying a real payment (like rent or council tax) was taken “in error”

3.  The bank then refunds the payment back into the victim’s account

4.  The scammer contacts the victim and pressures them to send that money to them, pretending it’s an overpayment, benefit, or mistake

The victim is then left with: 

• an unpaid bill (rent arrears, council tax debt, etc.) 

• the risk of being seen as involved in fraud 

• possible serious consequences, including making it harder to get a bank account loan or credit in future.

How to stay safe:

• Never share your bank details with anyone who contacts you unexpectedly 

• Keep an eye on your bank account for payments or refunds you didn’t expect 

• If something sounds too good to be true, it most likely is 

• Take your time – if anything feels odd, slow down and check with your bank before doing anything

If you think you’ve been targeted:

Contact your bank straight away. They can freeze transactions, stop the fraud and guide you on what to do next.

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