Your money isn't safe in a bank account: debit order fraud

[The_Right_Honourable_Brit]

More dodgy goings-on from banks...

JOHANNESBURG – The experience of Moneyweb reader Dr JM Makua should be a warning to anyone with a bank account. The message is clear: your money is not safe. There are literally hundreds of entities that could deduct money from your account via a NAEDO or non-authenticated early debit order.

When these entities are caught deducting money without permission, all they need to do is blame the transaction on an “error” and carry on as normal. The victim might even get an apology.

Standard Bank (JSE:SBK) customer Dr JM Makua is one such victim. Makua contacted Moneyweb frustrated by unauthorised debits going off his account almost every month. In recent weeks, the intensity of these debits increased. Recent debits were: R299.99 to SS Direct on July 26, R99.00 to Coast to Coast International on July 29, R299.99 to Quadricol on 31 July and R349.00 to Destination Dynamics on August 2.

Standard Bank senior manager and media complaints liaison Joop Dekker, notes that the bank has no obligation to protect its clients from debit order abuse.

Says Dekker: “Contrary to public belief the bank has indeed no obligation to verify the authenticity of any debit order, and as such the bank merely fulfils the function of a payment facilitator where any debit order is presented for payment

“A debit order is an agreement between the account holder and an external company in which the customer authorises such company to take money out of the bank account for services that entity provide to the customer. A debit order is not a contract between you and the bank, and the latter is not a party to the agreement at all.

“As such the accountholder indeed has the responsibility to regularly scrutinise his/her account statement(s) and bring to the bank’s attention any unauthorised debit order.”

Standard Bank notes that the Payments Association of South Africa (Pasa) is working to put a process in place, together with the banking industry, to track companies who abuse the debit order system.

It does not matter what bank you're with. An entity like Coast to Coast has access to any account. A previous Moneyweb investigation found similar cases of debit order fraud perpetrated on customers at other banks besides Standard Bank.

http://www.moneyweb.co.za/moneyweb-financial/your-money-isnt-safe-in-a-bank-account

As someone commented

The bank will not allow me to walk to the branch counter, and simply withdraw R1 000 out of your account on my say-so --> they'll require power-of-attorney at the very least, with all sorts of certified documents of proof that I am entitled to do so.
The debit order route is but a different conduit to achieve the same result --> a 3rd party drawing money out of your account.
Yes, you and I agree that I can draw money via debit order (so, the bank is not allowed to veto our agreement and deny me), but they need to vet that such an agreement is in place.

 

[akescpt]

Can't believe the level if kark we have to put up with as customers. How can someone just push through debit orders and the bank just shrugs their shoulders. Fsucking unbelievable.

 

[Zewp]

Yeah, I can't believe how in 2013 it's still so easy to just run a debit order on someone's account without them knowing, then run away.

Debit orders are shjt from satan.

 

[modern10]

Some bastard took R99.99 three months in a row and I only noticed last month. Still struggling to get my money back.

 

[The_Right_Honourable_Brit]

The scammers are probably pulling in hundreds of thousands of Rands per month. Notice the amounts are quite small...they're hoping people won't notice them.

 

[bekdik]

I wonder what the banking ombud has to say?

 

[isie]

The scammers are probably pulling in hundreds of thousands of Rands per month. Notice the amounts are quite small...they're hoping people won't notice them.

that's so true, i have a small debit order on my account for like 50 bucks, a few months ago a debit for the same amount went of but different reference on my side, so i called to check if it was them who made the deduction, they confirmed it changed just after my last debit but said i was the only person that called to check there were thousands of debits that went off and he was also shocked no one actually checks what goes off their accounts

 

[Sinbad]

I just checked my bank charges.
They've tripled in the last year.

/sends off angry email

 

[HavocXphere]

Yeah the fact that a signature isn't required is kinda sketchy too. e.g. a certain ISPs press a button signature.

that's so true, i have a small debit order on my account for like 50 bucks, a few months ago a debit for the same amount went of but different reference on my side, so i called to check if it was them who made the deduction, they confirmed it changed just after my last debit but said i was the only person that called to check there were thousands of debits that went off and he was also shocked no one actually checks what goes off their accounts

Protip: Export bank statement to excel & copy into standardized sheet. I've got one set up that flags all known items & shops in green leaving me to review half a dozen non-routine transactions.

 

[chrisc]

Most debit order systems are run by reputable companies like Netcash, who handle Multichoice and ADT. At the first sign of a complaint from a customer, they reverse the debit, credit the customer whose account it was debited from and advise their client that this has occurred.

I ran such a system for 22 years and found people often forgot they had a debit order in place and got a fright to see regular debits on their account. The problem is that this debit might be identified as "Netcash CH099846355-09" which means nothing to the debited customer, so you have to call your bank, get Netcash's number and call them. They are very prompt in dealing with complaints like this and I had to provide a written mandate from every customer who agreed to a debit order.

The situation described in the OP sounds like a dodgy collection agency, yet all financial institutions must have a FSB number and abide by the FSB standards.

Is there something that is missing from the OP's description of the event?

 

[noxibox]

I've had supposedly legitimate debit order handling companies process invalid debit orders against my account. They just passed the buck when approached.

There's another issue here besides banks not vetting these debit requests, and that is the banks carrying the account of repeat offenders. In my experience they simply don't care that one of their account holders is repeatedly fraudulently issuing debit orders.

 

[googoodoll]

I donate money to the SPCA via debit order which is supposed to go off on the 1st of each month but it goes off whenever it feels like it...

 

[TelkomUseless]

I donate money to the SPCA via debit order which is supposed to go off on the 1st of each month but it goes off whenever it feels like it...

never ever give a company access to debit order your acc. I pay them manually. Only debit order now is my home and life insurance/insurance. I pay the remaining with internet banking.

 

[Ecco]

Ouch, this is not cool. Blatent fraud by those guys running debit orders.

 

[googoodoll]

never ever give a company access to debit order your acc. I pay them manually. Only debit order now is my home and life insurance/insurance. I pay the remaining with internet banking.

I also prefer transferring the money myself but they had a campaign to get people to sign debit orders for a year and it was right after my cat died and I decided instead of getting a new cat I will help other animals in need so I fell for it so easily

 

[TelkomUseless]

I also prefer transferring the money myself but they had a campaign to get people to sign debit orders for a year and it was right after my cat died and I decided instead of getting a new cat I will help other animals in need so I fell for it so easily

i understand . Loss of a pet makes people do crazy things

 

[Malasius]

The scammers are probably pulling in hundreds of thousands of Rands per month. Notice the amounts are quite small...they're hoping people won't notice them.

They also target investment accounts so that people don't pick them up easily. Obviously these companies must have connections in the banks in order to verify investment accounts with funds! Standard Bank told me that anybody can add a debit order to any of their accounts with no form of authorisation. What a joke!

 

[Skywalker786]

Some bastard took R99.99 three months in a row and I only noticed last month. Still struggling to get my money back.

I am not sure what discussions you have had to date with YOUR bank.

However, this is quite a simple process. Go into your bank and ask them to reverse the debit orders to the presenting bank. Do not take no for an answer. It can be done. If the consultant refuses, demand to see the manager.

All you have to tell your bank is that it is an unauthorized debit order.

 

[WhyME]

I recently had about R11000 debited from my account and when I went to the bank I was told that I had to fill in forms and wait for 21 days/ investigator to contact me within 3 working days bla blah blah.

You see the bank withholds certain information on purpose, unless you make BIG noise at the bank you will be sent from peeler to post.

Bit of long story but let me try summarize:

The swiping on my account happened over weekend(Dont even ask me how they got hold of my information, my PIN etc) which meant that by Monday the transactions would show on my account but the bank has not paid the money over, so it shows as outstanding authorization. Again bank failed to inform me this that they have not paid money over, which meant they can cancel transaction chop chop.

When I asked of the actual place where they transaction had taken place I was told we cannot give u this info Sir, up until I came back following day telling them that police needs this info all of a sudden they could check.

To cut long story short, if you have someone swipe money out of your account illegal and it still shows as outstanding authorization you can get that transaction reversed with simple phone call to authorization department at Standardbank.

Thats what I did and got my money back with 24hrs. Not debit order but I thought should throw that piece of info out there.

 

[googoodoll]

... How can the bank not tell you where the transaction took place if its on your own card...?