Consumers dispute debit order fraud

Consumers dispute debit order fraud

2014-06-30 13:51

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.

  • Kathi Smuts - 2014-06-30 15:26

    I will not do business telephonically. These glib mouthed call centre agents are incredibly crafty. Unless there is paperwork. They will not get my business. I live by the rule of - if its not in writing it does not exist. All calls are recorded. Yeah right - ever tried to get a copy of recording? Put the lot of them on hold. They do not deserve our hard earned money.

      Paige Turner - 2014-06-30 17:11

      My first question to telemarketers is: "How much are you going to pay me?" I then keep them talking for as long as possible, and ask for their address so that I can send an invoice for my time they have wasted.

  • Utopian Indigent - 2014-06-30 15:41

    Obviously many consumers are plain stupid. Nonetheless, how can banks allow this? It is a breach of the trust placed by consumers in their banks to just allow debit orders willy-nilly. If the writer of this article was really independent, he would have taken on the banks. They earn fees on debit orders and accept any old excuse to add debit orders to our bank accounts.

  • James Smythe - 2014-06-30 15:57

    Even without the possibility of fraud people should NEVER sign or authorise a debit order - for one reason alone and that is that you immediately have lost control over your bank account by so doing! The plain fact is that one should simply not do business with any company which demands debit orders as the means of payment without offering alternatives which leave YOU in control.

  • Tshegofatso Brian Pistol Sebola - 2014-06-30 16:29

    I personally was a victim of this last year. Got all the documents from the service provider and it was clear that the individual was a fraudster since he put his own foto on a copy of my ID (not sure how he got hold of it). Opened a case but as usual, our incompetent police service couldnt find the guy even though his face was clear on the ID copy he used. I thereafter requested the bank (FNB) to implement a system of alerting clients whenever they receive a mandate for a debit order prior to releasing the debit order so that the client can query it before money even leaves their account thereby avoiding unnecessary charges and possible overdrawn account. They just said it will not be possible since it is not in their policy (load of bullsh.t). Reality is banks are aware of a solution to this problem but they will loose money in implementing it.

      Paige Turner - 2014-06-30 17:14

      Banks have departments that deal with fraud charges, however, most are not helpful at all. Capitec seems to be the exception --- very prompt about dealing with alleged fraud. I suggest you sue the bank for your loss.

      Tshegofatso Brian Pistol Sebola - 2014-07-01 08:55

      @Paige, i understand that. What i suggested is a system to avoid the dispute process and the inconvinience of debit orders that you didnt budget for. Preventative rather than reactive approach which leaves many of us with overdrawn bnak accounts due to these unexpected debit orders. It costs money to reverse and stop further fraudulent debit orders and its time consuming to go open a case with the police. A similar notification system that applies when you withdraw from the atm, but in this case it notifies you when a debit order is loaded against your account so that you can dispute it if it is indeed a fraudulent debit order before the money even leaves your account.

  • Fatima Dzingirai - 2014-10-01 07:26

    guys please beware of moobimola and how can one get back their money back

  • Magda Knoetze - 2015-01-26 13:28

    I have never done business telephonically, but every two or three months amounts of R99 to R199 is deducted from my bank account, which I had to go in to have it reversed an even if you get a telephone number, that number never exists when I want to call them, I am so frustrated about this

  • Magda Burger - 2015-05-21 18:58

    I received a SMS from Tele SA that they are activating debit order for R99.99. It say : Dear customer ...

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