Debit order fraud: Banks get more time to fully rollout system to oust scamsters

Bank ATM. (Duncan Alfreds, Fin24)
Bank ATM. (Duncan Alfreds, Fin24)

The SA Reserve Bank has granted financial institutions a 12-month extension to fully implement a system designed to fight the growing scourge of so called "rogue debit orders".

DebiCheck came into effect in August 2018 and requires banks to send confirmation requests to clients before processing a new debit order.

So far, eleven bank are using the system, including Absa, Bidvest, Capitec, First National Bank, Nedbank, Standard Bank and Ubank.

"The eleven banks participating in DebiCheck are committed to the process and still aim to have most companies on the system this year," said Payments Association of South Africa (PASA)  CEO Walter Volker.

Fin24 has been inundated with consumer complaints about unauthorised debit orders which often come in varying amounts. The most common amount has been R99.

"Thousands of user companies, from large corporates to small business, will be using the system – so we need to ensure it remains stable and that consumers are not adversely affected," said Volker.

PASA explained that banks were bound by law to honour collections submitted into the payment system by other banks on behalf of their clients.

Although there has been a rising number of unauthorised debit order reversals, the majority of disputed debit orders were found to be legitimate and only reversed by customer so that they could use the money for other things, according to the organisation,

"To put the numbers in perspective, on average about 1.5 million of the 55 million monthly debit orders are disputed, [which is] less than 3%."

Volker noted that based on PASA and bank estimates, of the 1.5 million disputed debit orders, only about 10% are actually unauthorised.

What can customers do to protect themselves?

  • Check your bank statements regularly for transactions you do not recognise.
  • Query unauthorised debit orders with your bank immediately and report the details to the Payments Association of South Africa at doa@pasa.org.za.
  • Ensure that your bank has your correct cellphone number so that you receive SMS alerts when money is deducted from your account and also to receive DebiCheck confirmation requests.
  • Be wary when entering into contracts verbally, electronically or in writing.
  • Do not share or confirm your banking details, including your account number and branch code, if you are not certain exactly what they will be used for.
  • Do not dispute debit orders that you have authorised.

PASA added that it is also working with to ensure rogue companies are identified and removed from the payment system.

"This is a very serious matter for us and we are doing everything we can to identify those companies who are abusing the debit order system," said PASA senior legal counsel Charl Ackerman.

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