Debit order fraud is rife in South Africa. A recent report by Carte Blanche found that banks in South Africa receive an average of 200 000 disputes from customers, regarding “mysterious debits” every month. These amounts are usually below R99, so many consumers find it too much of a hassle to follow up with this fraudulent activity.
These amounts often go unnoticed by those who don’t check their bank statements regularly.
How does it happen?
Some unscrupulous call centre agents may offer consumers products and process a transaction as if the consumer agreed to it.
These unethical companies do this to a wide array of consumers – making a tidy profit at their expense.
Some banks have suggested that many customers experience this and that it has become standard business practice for some new businesses to intentionally do this, as a means of marketing their product.
According to Advocate Clive Pillay, Ombudsman for banking services: “A debit order is an agreement between a customer and a service provider. In terms of that agreement the customer authorises the service provider to take money out of her or his account for the service provided. The bank is not a party to the agreement.”
Banks will usually say it’s your responsibility to check your account regularly and to report suspicious activity. They may also charge you for debit orders you suspect may be fraudulent.
The Payments Association of SA (PASA) says that if you report the dispute within 40 days of the debit order going off, the bank must refund you immediately.
“Protection to the consumer is unlimited unless there is a valid signed mandate,” says Walter Volker, the head of PASA and author of Essential Guide to Payments.
What to do:
- Suggest that your bank asks you to give permission for the transaction to take place.
- Check your bank statements thoroughly.
- Give your bank a written instruction to end the deduction.
- Ask your bank to implement a notification system.
The SA Reserve Bank and PASA are currently developing an authenticated debit order system that aims to curb this type of fraud.