In last week’s blog we provided you with information on the different types of debit orders, including the new Debicheck debit order system. Consumers are often faced with a situation where they realise that funds are being debited from their bank accounts by way of fraudulent debit orders:
- where they never provided any valid mandate or
- where the underlying contract has been validly cancelled or has come to an end.
What can consumers do in these circumstances?
The Code of Good Banking Practice and the rules of the South African Payment Association (PASA), of which all major banks in the country are members, give consumers the right to:
- Stop a payment instruction in respect of a debit order to prevent a debit order for a specific amount being processed on their account; and
- Dispute (i.e. reverse) a disputed EFT or NAEDO debit order if:
- The consumer did not authorise the debit order in question; or
- The deduction of the debit order was in contravention with his / her authority – i.e. the deduction was for a higher amount than the original mandate or deducted on the wrong date
- The consumer instructed the service / credit provider to cancel the debit order mandate; or
- The consumer stopped payment of the debit order instruction.
AEDO debit orders can only be disputed (reversed) in cases of fraud and Debicheck debit orders cannot be reversed at all. See our previous blog for an explanation of the different types of debit order.
If you dispute or stop a debit orders for another reason, e.g. cash flow difficulties, you risk breaching your contract with the service / credit provider and if you fall into arrears as a result, the service / credit provider may submit this adverse information to a credit bureau which may impact your ability to obtain credit in future. A high dispute ratio on a consumer’s account may also lead to your risk profile at your bank being impacted negatively.
Disputing valid debit orders in respect of insurance may result in your cover being suspended or cancelled.
Stopping a debit order:
Consumers can give their bank a written stop payment instruction to prevent a debit order for a specific amount from being processed on their account. When a debit order is returned as “payment stopped” on the instruction of a consumer, no further debits may be processed by the service / credit provider. Stop payment instructions only remain on a bank’s system for a limited period, three to six months depending on the bank- afterwards the service / credit provider may again attempt to debit the account. Keep a close eye on your bank statements so that you immediately spot any fraudulent debit orders.
Some banks, such as ABSA, have indicated that stop payment instructions will remain in force for a period of six months after which time the transaction will be viewed as cancelled.
Most banks have a standard form to be completed by consumers to stop a debit order. Consumers can also make use of the specific bank’s online banking service or app.
Debicheck debit orders can be suspended in the same way as stopping a normal debit order, i.e. by contacting your bank directly, alternatively, by logging in on your online banking platform / app and selecting the “suspend Debicheck” or similar option provided on the relevant platform.
Suspending a Debicheck debit order will have the effect of the Debicheck debit order not being processed against a consumer’s account in future. The consumer must still contact the service / credit provider cancel the underlying contract with their service / credit provider.
Disputing debit orders:
If a disputed debit order is reported within 40 days of it appearing on a consumer’s account, the PASA rules state that the payment must be reversed immediately. Tin other words, the amount is paid back into the consumer’s account.
If a consumer only disputes a debit order more than 40 days after it went off, the consumer must apply to their bank to have the debit order reversed. The consumer’s bank (homing bank) will then investigate the matter and submit a query to the bank of the service / credit provider (sponsoring bank) that debited the account. The sponsoring bank is given 30 days to prove the validity of the transaction, after which it will be cancelled if invalid and the funds manually returned to the consumer’s account. If the sponsoring bank, however, produces a valid mandate for the transaction, the debit order will not be reversed.
All the major banks allow their customers to dispute debit orders via their online banking platforms or apps, however, the debit orders which can be disputed in such a convenient manner are normally capped at amounts ranging between R200 – R500. This does not mean that a consumer is not allowed to dispute a debit order for a larger amount – it simply means that the consumer will have to go into a branch, contact the bank telephonically or submit an email request to the bank in order to have the debit order disputed.
Useful links:
Click on the tutorials on how to stop / dispute debit orders at some of the major South African banks:
https://www.youtube.com/watch?v=kOxHcAP-Xew – Standard Bank App for Android users
https://www.youtube.com/watch?v=pidyE2Asq14 – Standard Bank App for Apple users
https://www.facebook.com/FNBSA/videos/how-to-dispute-a-debit-order-on-the-fnb-app/966260620492967/ – FNB – Disputing debit orders
https://www.fnb.co.za/demos/stop-a-debit-order-PC.html – FNB – Stopping debit orders
https://www.capitecbank.co.za/help-centre/how-to/dispute-a-debit-order/ – Capitec – Disputing debit orders
https://personal.nedbank.co.za/bank/bank-accounts/how-to-guides/request-to-reverse-a-debit-order.html – Nedbank – Disputing debit orders
Call Centre Contact Numbers :
Capitec – 0860 10 20 43
Nedbank – 0860 555 111
ABSA – 0860 008 600
FNB – 087 575 9404
Standard Bank – 0860 123 000
Discovery Bank – 0800 079 697
Next we will be telling you everything you need to know about PASA and their rules, and how consumers can use those rules to protect their money against unscrupulous credit or service providers.