Five pound notesCharity fundraisers are to be investigated for poor practice amid allegations they were using confusing tactics and flouting rules.

The Fundraising Standards Board (FRSB) will look into Tag Campaigns, whose street fundraisers were reportedly failing to abide by some regulations while raising money for Marie Curie Cancer Care.

The regulator announced it was launching a probe after an investigation by The Sunday Telegraph exposed the tactics used by the workers known as "charity muggers", or "chuggers".

An undercover reporter recruited to Tag as a street fundraiser claimed that during a one-day training session, trainee fundraisers were not informed of the need to make any disclosure that they are paid - a legal requirement for fundraisers in the UK - the regulator said.

Video footage handed to the FRSB by the newspaper showed team leaders urging fundraisers to be persistent and one fundraiser confessed her technique to get passers-by to stop and talk was to "confuse" them, falsely telling them that they had dropped something, the FRSB said. Best practice standards state that fundraisers should "never deliberately confuse, mislead or obstruct the public".

A team leader was also allegedly sighted following pedestrians down the street after they had clearly indicated that they were not interested, stating "we have to bend the rules every now and again."

Alistair McLean, chief executive of the Fundraising Standards Board, said: "The footage of both training and on-street fundraising that I was shown by The Sunday Telegraph is deeply worrying. Fundraising agencies must maintain the highest standards at all times, protecting and building the brands and reputations of the charity clients they work with. Any breach of these standards can have a weighty impact on trust and confidence in the charity, fundraising technique and, ultimately, donation levels."

Tag Campaigns was raising money for the cancer charity in various towns and cities around the country last November when the poor practice was alleged to have occurred.

Fabian French, director of fundraising at Marie Curie, said: "We welcome this investigation by The Sunday Telegraph. We are disappointed by these allegations and we have launched an immediate investigation. This is the first time the charity has worked with Tag. They were running a pilot project to test a new way of fundraising for Marie Curie, which has now come to an end.

"Marie Curie is a long-standing member of the Fundraising Standards Board and fully supports its fundraising promise, as well as the codes of fundraising practice published by the Institute of Fundraising. We are also a member of the Public Fundraising Regulatory Association, which has its own code of fundraising. Street fundraising remains a vital source of income for many major charities but it must be done in the right way."