How to stay safe from fraud with a Direct Debit

Many of us are vigilant about the risks of online fraud, identity theft and payment scams that take place both on the internet and in the real world – and you might think you are automatically protected when you send money online by Faster Payments.

But in fact, if you choose to transfer money online, you take the responsibility for that decision, and this can leave you out of pocket if you only later realise you have been defrauded.

The best solution is to make sure you only ever send money to someone you absolutely know you can trust, but how do you know if one supplier is more trustworthy than another?

One good way is to see if they accept payment by Direct Debit, and to use this option if it is available. Because only authorised suppliers are allowed to take payment by Direct Debit, it is a sign that the organisation in question has proved itself to be trustworthy on payments in the past.

You also benefit from the Direct Debit Guarantee, a promise made both by you and the supplier, which can help you to recover any money that is incorrectly taken from your account.

What is a Direct Debit?

A Direct Debit is similar to a standing order – it’s an agreement you enter into that allows a supplier to collect payments from your account when you owe them money, and is often used for monthly bills like energy, mobile phone and home entertainment subscriptions.

A Direct Debit arrangement means the supplier can adjust the amount they take from you, for example if you use your phone to make more calls or send more picture messages in one particular month, or you can have it as a fixed amount.

You should always be notified well in advance if the amount will be changed, and before any money is taken from your account, so you can always make sure the funds are available – important if you use an Arro Personal Account as a secondary account with just enough money in it to pay your bills.

In theory, Direct Debit means the right amount of money will be collected from your account every time, but it’s always worth checking the notifications when they come through, before the funds go out of your account.

If a mistake is ever made, the Direct Debit Guarantee states that you can claim back the incorrectly taken funds and should receive them back into your account as soon as possible – one of the few ways you can protect yourself against fraudulent activity and honest mistakes on direct transfers of funds.

Direct Debit security

There are a few ways Direct Debits help to make direct payments more safe and secure for the accountholder:

  • Only authorised suppliers can take payment by Direct Debit.
  • The Direct Debit Guarantee protects you against incorrect payments.
  • You are notified of any change in amount and when a payment is due to go out.
  • The arrangement means you don’t have to manually re-enter payment details every month.

When you set up a Direct Debit online from an Arro Personal Account, you also benefit from our usual security precautions, including two-factor authentication, a completely encrypted account dashboard and impenetrable code that was written with security in mind and is regularly tested for any weaknesses.

Plus, if you set up an Arro Personal Account as a secondary account just to pay bills, you can keep just enough money in it, away from your main current account or savings – and there’s no overdraft or credit card, so you have a degree of protection against anyone running up personal debts in your name.

Get an Arro account for Direct Debits

You can open an Arro Personal Account in just three minutes and get immediate access to our online dashboard with the ability to set up Direct Debits.

Just fill in our simple online application form, including your name, UK address, date of birth and a few basic contact details.

We use online databases to verify your identity and your address down to street level – a near-instant process that does not access your credit file or show in any way in your credit history.

Once you are authorised, we will send you your login details. You can get onto the Arro Money online dashboard immediately, transfer funds into your account at no cost, and start setting up Direct Debits and other outgoing payments to safeguard yourself against any would-be fraudsters.