Abuse of the debit order system is rife with some consumers finding that
unscrupulous operators are raiding their bank accounts four times a month.
No one, from the bank`s newest customer to the chairman of the Banking
Council, is safe from this risk. And the scariest part is that there is
very little you can do about it.
Debit orders are a convenient way to pay bills which vary in amount each
month, such as cellphone accounts, municipal accounts and some insurance
policies. The problem is that once you have given another person or company
authority to withdraw any amount from your account each month, you have
opened the door to abuse by inefficient or dishonest companies which
continue to debit you even if you instruct them to stop. This is because
the order is an agreement between you and the company and the bank will not
intervene. The only certain way to stop the abuse is to close your bank
account.
Take the case of Mr van N of Pretoria. For a year he has been trying
unsuccessfully to stop deductions from his account to an internet company.
Each time he stopped the order in favour of the company, the company simply
changed its name so the order went through again the next month. His bank
could offer no way to stop the payments permanently.
Bob Tucker, chief executive of the Banking Council, has also been a victim
of debit order abuse. But he has no solution either: the debit order system
used in South Africa is the same as in the rest of the world and can
unfortunately, be abused, he says.
Around the world people are trying to work out how to shift to systems
where you trigger the payment rather than an outside party "pulling"
payment from your account, he says.
"But the reality is that the public find the pulling method more
convenient."
Problems with debit orders generally crop up in two instances:
* The company or person you are paying may be dishonest and deduct amounts
off your account against your wishes. You may also be debited more than
once a month, on different days for instance, or the amount debited may be
changed to get round your cancellation of the order; and
* Even an honest company may continue to draw from your account if it is
lax about cancelling your debit order or where you dispute an account.
Reversing a debit order is expensive: at FNB, for instance, it costs R85,50
each time.
Di Terblanche of the Consumer Institute of South Africa says though a debit
order is an agreement between you and a third party it is not right that
money is deducted from your account without your knowledge or consent.
"It takes away the control you have over your account. The banks are the
guardians of our funds and must take responsibility," she says.
The head of Market Conduct at the Financial Services Board (FSB), Oppies
Opperman appeals to the public not to sign debit orders with just anyone.
"We have been inundated with complaints about people having money deducted
from their banking accounts under the pretext of insurance and advice.
Sometimes the same amount gets deducted up to four times a month. In fact,
it has got so out of hand that we have referred several matters to the
Attorney General in the various provinces. Victims of these deductions have
given names to the FSB and we encourage the public to give more such
information as we are establishing a database of those who abuse the system
for further investigation.
"The question is: how does someone get access to a bank holder`s account
without the account holder being aware of it?"
* If you suspect that debit orders are being deducted from your bank
account without your authorisation, contact Rene Bouwer of the FSB at the
toll-free number 0800 110443.
Tips
* Never sign a debit order with an organisation that you are not sure about;
* Read the wording of a debit order carefully and adapt it to suit your
needs;
* As a safeguard, you can specify a limit on the amount that can be drawn
from your account;
* Specify a notice period on the debit order of say, six months or one year
as a precaution - You can always sign a new debit order after that if you
need to;
* If the amount you owe a company is the same every month, set up a stop
order instead of a debit order. If you ever need to, you`ll be able to stop
payments permanently; and
* Check your bank statements carefully and regularly and ask the bank to
reverse any unauthorised debits.