Why it’s so hard to convict debit order fraudsters in South Africa

The Payments Association of South Africa (PASA) is going to make adjustments to the way debit order fraud is reported to ensure they gather the necessary evidence to convict rogue users.

It has been difficult to build cases against debit order fraudsters, and PASA’s senior legal counsel Charl Ackerman said they have learnt much in the last few months.

“There have been arrests. The wheels of justice turns at its own time,” said Ackerman.

Certain rogue operators being prosecuted are out on bail, with hearings scheduled for later dates.

Part of the problem with successfully prosecuting a debit order fraudster is that it is easy for them to claim that a rogue debit order was a mistake.

“If you confront the rogue user, they generally give the money back,” Ackerman said. From there, very few consumers will go to the police and submit an affidavit.

“Even if they do, the police laugh at them. Why are you bothering them over debit order fraud of R99 or R45?”

Establish a trend

Ackerman explained that to build a case against a suspected debit order fraudster, you have to establish a trend.

For this reason, PASA is developing a more robust system of reporting rogue debit orders to gather the documentary evidence needed for a successful prosecution.

No one will launch a class action case against rogue debit order operators, and it is up to PASA to compile a docket of disputes against an entity, he said.

The docket is then provided to the South African Banking Risk Information Centre to take the prosecution forward.

DebiCheck

PASA’s work to prosecute debit order fraudsters is running in parallel to its rollout of a new authorisation system called DebiCheck.

DebiCheck will require that debit orders processed in the early payment window be confirmed by the consumer whose bank account is being debited.

Banks may elect to perform the debit order confirmation via SMS or their banking app.

The early payment window is a priority timeframe in the mornings every day when certain debit orders are allowed to go off. Some companies find it beneficial to use the early window as they can collect payment right after salaries are paid into people’s bank accounts.

However, with DebiCheck only affecting the early window, fraudsters may migrate to the late window.

Walter Volker, the CEO of PASA, said they are expecting that migration.

“That is why the work Charl and his team are doing is so important,” said Volker.

“We are developing proactive measures to secure the ecosystem. We have not underestimated the effect of rogue users migrating to the late window.”

Among the initiatives underway at PASA is working with the Companies and Intellectual Property Commission to get access to information on the directors of companies suspected of debit order fraud.

Ackerman’s team is also working on publishing a list of rogue users.

Businesses and individuals will then be able to consult the PASA database to ensure they steer clear of a known rogue debit order user.

“We just have to get through some legal ticks, then we can make it available,” said Ackerman.

Now read: Fines and “name and shame” list for debit order chancers in South Africa

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Why it’s so hard to convict debit order fraudsters in South Africa