Money Wise up to rogue debit order costs
Save on fees by disputing fraudulent debit orders online
● The only thing worse than having to deal with unauthorised debit orders on your bank account is being charged hefty fees by your bank to stop fraudsters from stealing your money.
FNB announced last week that it will waive the fee for stopping unauthorised debit orders when clients do so through its electronic banking channels. Ryan Prozesky, CEO of consumer core banking at FNB, says the bank is doing this to combat “the scourge of rogue debit orders impacting the industry and FNB customers”.
Although the fee waived was only R5, Prozesky says the bank can no longer allow its customers to “bear the brunt” of debit order fraud. FNB is also monitoring businesses that are processing illegal debit orders on its clients’ accounts and reporting them to the Payments Association of South Africa. The bank will eventually discontinue services to such businesses.
Due to the increasing volume of complaints related to unauthorised debit orders, the ombudsman for banking services said this week that it had started reporting these complaints as a separate category of complaints. “Just four years ago, these complaints were part of current accounts. Now it’s a standalone item on the ombud’s reporting dashboard,” says ombud Reana Steyn.
An unauthorised debit order constitutes fraud. If you detect an unauthorised debit order on your account, you should contact your bank immediately. Your bank will be able to lodge a query by tracking the reference number. All participants in the payment system must comply with the rules set out by Pasa, the organisation that determines the guidelines for service providers to collect monies via debit order, Steyn says.
About twomillion debit orders are disputed every month, according to Pasa. Most disputes relate to “non-authenticated early debit orders”, which are early debit orders where the mandate may be authenticated by means of a voice recording or a signature.
A non-authenticated early debit order is unlike an authenticated early debit order, which is authenticated using your bank card, which is entered into the service provider’s terminal and requires your PIN. This takes place when you and the merchant conclude the agreement authorising the merchant to debit your account in future. The mandate is captured electronically and these debit or- ders can’t be disputed.
Disputing a non-authenticated debit order with a bank is tricky because a debit order is an agreement between you and a supplier to allow payment from your account. Your bank is not party to the agreement and can’t take an instruction to cancel an agreement between you and another party.
The number of disputed debit orders in South Africa is too high, says Pasa CEO Walter Volker. This was the impetus for DebiCheck, a new system that will place the onus on banks to electronically authenticate all new debit orders with their clients.
To electronically confirm your debit order means that you confirm the details of your debit order on an electronic device such as a cellphone, personal computer or an ATM. This is done only once.
Your bank will also have to keep an electronic record of the debit order information that you have confirmed and check this before processing the debit order to your bank account. This means DebiCheck debit orders will not be processed by your bank if they are outside the conditions agreed to by you.
DebiCheck is being phased in. Volker says it will be used for debit orders processed “in the early processing window” — meaning directly after a salary run — and not for those processed later in the day. “Companies wanting to collect in the early processing window will have to use DebiCheck from October next year.”
Volker says “rogue companies” are not the only ones to blame for the high number of disputed debit orders. Consumers abuse the system by disputing legitimate debit orders knowing that a valid mandate is in place. They do this when they are short of cash. DebiCheck will put a stop to this too.
These complaints were part of current accounts. Now it’s a standalone item Reana Steyn Ombud for banking services