Scam targets ‘chink’ in banks’ armour

Cape Town - Many people wouldn’t look twice at a R99 deduction from their bank account, if they check their statements at all.

But be warned, this is being taken full advantage of by fraudulent companies in the latest banking scam involving debit orders.

The scam targets an alleged chink in the armour of banks, using so-called non-authenticated debit orders (NAEDO) which are activated ahead of regular debit orders, allowing creditors to claim from their debtors.

Payment Association of SA (Pasa) spokesman Arif Ismail said 170 000 cases of unauthorised debit orders, or 0.4 percent of the 31 million debit orders processed in total, were reported to them across the country every month. Not all were legitimate complaints, he pointed out.

“NAEDO is a debit that comes off the system before regular debits, aimed at allowing creditors to collect from debtors. NAEDO amounts to about 14 million interbank transactions a month, valued at about R9 billion,” Ismail said.

Banks could not keep track of all agreements made by clients, and so approved the debit orders as a form of “good faith”. “

Only after a problem has been reported can the banks act. The dispute ratio was 3 percent about 18 months ago, but has since risen to between 4 and 6 percent, and caught our attention,” he said.

Ismail explained that the amounts were purposely kept small to avoid alerting victims via SMSes from their banks. So unsuspecting victims who failed to regularly check their bank statements could find themselves significantly out of pocket by the time they finally realised they were being defrauded.

“Dahunny”, an FNB customer who lodged a complaint with consumer forum website Hello Peter in June, said “Eennasie” debited R99 from his account on May 30: “I do not know this company nor do I have any debt standing on my name. I want my money reversed because I did not give my consent nor did I approve of any debits from Eennasie/ NAEDO Collection.”

The angry complainant said this was the second such incident, both involving companies allegedly in Durban.

“Worse, RB Jacobs from FNB asks me if I had called NAEDO to establish why my account is debited. If I as a client do not have any debt collections orders in my name why should the onus be shifted on me, their client, to do the ‘investigation’. This is highly unacceptable and I am not a happy client.”

FNB responded to the message, saying it was investigating, but the matter was not indicated as closed according to the case status.

Ismail said Pasa would tighten its security in response to the growing increase in unauthorised debit orders.

Measures included telephonic and written permission to debit an account within 21 days, and a review process should a company dispute ratio rise above 0.5 percent.

If the review revealed that the rules were not being complied with, the user had three months to ensure compliance. Failure to meet the requirements would see a company put on a debit order abuse list, and it would then not be allowed to process debit orders for five years.

Rya-Mari Muller, FNB head of customer value services, said the bank supported the rights of its customers to dispute, stop and reverse debit orders without inconvenience.

“Customers can reverse unauthorised debit orders and we refund their accounts almost immediately, if they ask for assistance within 40 days of the debit occurring. Older debit orders can also be reversed but the solution takes longer,” she said.

Kalyani Pillay, chief executive of the SA Banking Risk Information Centre (Sabric), said victims of unauthorised debit orders should report the matter to the police immediately. “Consent for a debit order can be in writing or verbal. The entity requesting payment must, however, be able to prove that they have authority from the customer to request the payment.

“Banks support their clients as best they can to reverse unauthorised debit orders if they are reported timeously. The banks, however, cannot prevent an unscrupulous entity from again alleging to have consent of the client to request payment from the account.”

She said banks used various measures to counter fraud, but could not reveal any further details.

kowthar.solomons@inl.co.za

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