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Consumers dispute debit order fraud

Johannesburg - A full-scale effort is underway to weed out crooked telemarketers, whose fraudulent debit orders have resulted in more than 120 000 of the 31 million payment orders processed monthly being disputed by consumers, according to Walter Volker, CEO of the Payments Association of South Africa (Pasa).

"We are dealing with a major problem where fraudsters are setting up cottage industries where they use banking details obtained illicitly to defraud the public on a massive scale," said Volker.

"We recently had to blacklist a number of companies because of the very high rejection rate of payment orders by the banks concerned where clients disputed the deductions."

Fred Steffers, managing director of payment systems company PS&S, said in some cases crooked telemarketers submitted payment lists for which they did not have valid mandates to deduct money from unsuspecting consumers.

"These bogus instructions resulted in the debit orders having to be reversed at some considerable cost to my company and other payment systems operators," said Steffers.

How to dispute an illegal debit order

Both Volcker and Steffers made the point that relatively unsophisticated consumers were at the greatest risk because they lacked the knowledge of how to dispute illegal debit order deductions which often required several telephone calls to both the banks and the telemarketers who often refused the reverse the deduction.

Steffers said if a consumer detected a fraudulent deduction on their bank statement the first step should be to demand a copy of what is termed a mandate.

In the event of a telemarketer, this would be in the form of a recorded version of the telephone conversation, where the consumer explicitly authorised the telemarketer to deduct the payment from his bank account.

"If the company who submitted the debit order fails to respond, banks are mandated to reverse the transaction if the consumer lodges a dispute with the bank within 40 days," he said.

"I would also urge consumers who have been defrauded to register a case of fraud against the telemarketer with their nearest police station so that legal action can be taken against these scammers."

One shortfall of the Pasa Bad User List is that members of the public will not have access to it.

"For legal reasons it is only being made available to banks so that they can identify debit orders emanating from these blacklisted entities and stop payment before it is processed," said Volcker.

Training needed


Following the revelation that more than 100 telemarketing companies had been blacklisted by Pasa for committing debit order fraud, an expert in call centre staff training has suggested that intensive training may offer a partial solution to the problem.

Divinia Fernandes Esch of Savant People Development, who was ranked the best trainer at the Contact Centre World Awards in Las Vegas in November 2013, said many contact centre employees are either inadequately trained or not trained at all.

They must understand what exactly constitutes a risk or fraudulent transgression and what the consequences are of committing such transgressions.

These are critical elements that need to be incorporated as part of any training programme that is facilitated within organisations, as failure to do so will have significant ramifications for both employees and organisations alike.

"There is no question that aggressive and unethical sales practices, as well as deliberate fraud is being committed by sales agents, and has had a direct influence on how they are perceived by the public," said Fernandes Esch.

"The reality however, is that there are ethical, hardworking and principled telesales agents who are honourable, and view their role as a career, and not simply a job."

She said unfortunately these individuals have to bear the repercussions of dealing with clients who have lost confidence and trust in doing business telephonically, due to having had past dealings with unscrupulous individuals who give the industry a bad reputation.

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