Can a Direct Debit be set up without permission? | Interbacs (2024)

With Direct Debits now the most popular form of making recurring payments for a range of services, banks are making it easier to sign up to them.

Previously, it was a requirement to be there in person to sign a Direct Debit agreement. But with the advancement of technology you’re now able to do it from the comfort of your home.

That opens the door to new levels of fraud. So can a Direct Debit be set up without permission? Continue reading our helpful guide to find out.

Can someone set up a Direct Debit without my permission?

With the advancement in technology, especially in the banking industry, you can now set up Direct Debits through an app on your smartphone. In some cases, a signature isn’t required. So, essentially, it is possible for somebody to set up a fraudulent Direct Debit in your name without permission.

However, if you can prove to your bank or building society, and the company the agreement has been set up with, that the Direct Debit was not set up by you, a full refund is issued and the agreement cancelled, according to the Direct Debit Guarantee.

If, when checking your latest bank statement, you do not recognise a payment that is made via Direct Debit, you should contact your bank or building society immediately. They will be able to investigate the issue and, if found to be a fraudulent Direct Debit, it can be passed onto their fraud department who will take the necessary action.

What do you need in order to set up a Direct Debit?

When setting up a Direct Debit for rent or mortgage payments, gym memberships, phone contracts and much more, there are a handful of details you’ll need in order to complete the agreement. They are:

• Your name and address
• Name and address of your bank or building society
• Your bank or building society account number
• The branch sort code of your bank or building society
• The name(s) on the account

Once these details have been passed over to the relevant company you’re signing an agreement with, you’ll be made aware of the frequency of payments or the duration of the agreement and the amount each one will be. Only then will you be able to fully confirm the agreement and sign up for the Direct Debit.

Unfortunately, someone with your details may be able to create a Direct Debit agreement without your permission. However, most banks now offer more levels of security that may involve logging into your banking app from your phone. Someone without your login details would not be able to do that.

However, as mentioned above, if someone was somehow able to create a Direct Debit in your name, the Direct Debit Guarantee offers you protection by ensuring that your bank must refund you immediately if it is found to be false.

Can you authorise a third party to sign up to a Direct Debit for you?

Given the ease at which some people are able to fraudulently open a Direct Debit agreement in someone else’s name, you would think you would be able to sign up for someone else with their express permission.

However, you can’t actually do so over the phone or online. It is only possible in person. Only the account holder is able to set up a Direct Debit instruction. Even if you were to authorise a third party to set up a Direct Debit, a paper authorisation form would still be forwarded to you from the bank or building society.

What's the right payment solution for your business?

When it comes to streamlining your company's payment solution, there are several options to consider. However, knowing the right fit can be difficult.

Thankfully, we've put together our Solution Finder, designed to help you discover the ideal payment solution for your business — no matter its size or current payment collection process.