Direct Debit by Phone

There's a difference here between best practice and common practice.

My best practice recommendation would be that if a donor offers, by all means, take down the donation information by phone. Never turn a donor away who wants to give. Then tell the donor that you will be sending a confirmation form in the mail, and could he/she please verify and sign the confirmation and send it back to you? An actual voided check is not necessary, so long as you have the account information correct. Print the verbal account information on your confirmation statement for the donor to verify.

The important part here, is to get a written signature indicating donor approval. The reason is because a donor's bank may challenge a direct debit (they almost never do, but it can happen). Also, your auditor may question the transaction if it is sizeable. Consumer Protection tells consumers that one of their rights involves their bank demanding signed authorization if needed.

Common practice is another matter. There are so many nonprofits and for-profit companies that accept direct debit information by phone and online. Bill collectors who fear being challenged by unwilling consumers will audio-record the customer's approval, for legal protection in place of a written signature. But most places don't. And, so many donors give direct debit info online as an equivalent to debit card payments. Credit card payments are supposed to have a written signature as well - yet, how many times have we taken credit card info from a donor over the phone and typed it in, ourselves, to our online donation forms or EFT processing records?

It's done all the time. However, you don't have the legal protection if the transaction is challenged. That's why, even though it is commonly done, I'd still advise taking the sure road and sending a confirmation follow-up by mail.