Absa is the first bank to allow customers to reverse unauthorised debit orders online.
Debit order fraud is on the increase in South Africa. Syndicates are obtaining a database of accounts illegally, and hitting these accounts with small amounts. According to the Payments Association of South Africa (PASA), in the majority of cases, these debit order lists are sold or “made available” by employees of commercial companies, trade unions or even government departments who use the debit order system to make membership deductions, collect fees, etc.
The fact that so few people actually check their bank statements allows these crimes to go undetected for long periods of time. The syndicates also target lower-income earners who may not know their rights or how to raise a dispute ‒ they simply close their bank account, forgoing the funds already withdrawn.
Even when a customer raises a complaint with their bank, the fraudsters simply change the debit order amount so that it can get through the system.
According to data from PASA, South African banks collectively process approximately 31 million debit orders every month, of which around 120 000 are disputed – not all of these are necessarily fraudulent but any fraudulent debit order undermines the integrity of the system.
Free online tool
In order to combat this crime, Absa has launched a free online tool to allow their customers to reverse unauthorised debit orders. Absa customers are able to view all debit orders that have gone off their accounts during a given period of time, request that any debit order which has taken place in the last 40 days be reversed (and they will receive the money back in their account instantly) as well as stop debit orders from going off their account in future.
“Such debit orders can be reversed or disputed within 40 days after the debit or thereafter while an instruction to cancel a debit order remains on Absa’s system for a period of six months. After this, the service provider may again attempt to debit the account and it will be processed,” says Marius de la Rey, Chief Executive, Customer Channels & Distribution, Barclays Africa Retail and Business Banking.
It is therefore important that clients check their statements regularly for any fraudulent debits, which in most cases are very small amounts which can easily be missed.
De la Rey however cautions customers against cancelling debit orders in an attempt to manage their cash flow. “Many consumers unjustly dispute debit orders when they are short of cash or run into financial difficulties. It is important for customers to note that, if they use the dispute process to manage cash flow, they run the risk of losing out on policy pay-outs when they claim, due to inconsistent payment history. Similarly, a high dispute ratio in a person’s account will lead to that person’s risk profile being negatively impacted,” he warns.
FNB is working on a reversal functionality via other digital platforms, and will announce details some time next year. Currently FNB customers can stop a debit order before it goes off on any FNB electronic platform but in order to reverse a debit order they would need to visit their nearest branch. No fees are charged when a customer reverses an unauthorised debit order. FNB says it also has several proactive systems in place where customers receive an SMS if they identify a debit order that could potentially be unauthorised, regardless of the amount.
How to access the service
Absa offers free access to internet banking enabling customers to transact using a digital channel or device of their choice. For customers who use their cellphones to access the internet, they will be able to reverse unauthorised debit orders by accessing the Absa Online platform via their cellphone (if they are registered as online banking customers).
If you do not have access to the internet ,you can personally reverse unauthorised debit orders at any time by logging on to Absa Online at an internet kiosk at any Absa branch.
Know your rights
Q: There’s an unauthorised debit order on my account. Can the bank reverse it?
Banking rules allow that unauthorised debit orders can be disputed. If a reversal is requested within 40 days after the debit has gone down, the bank will compensate the customer immediately. For disputes lodged after 40 days, an investigation has to take place and customers cannot hold the bank liable and will also not receive an immediate refund. So it is important to keep track of your banking transactions on a regular basis.
Q: How do I make sure that this issue is permanently resolved?
Both Absa and FNB allow customers to activate a stop payment instruction themselves. The instruction will remain in force for six months after which time the transaction is viewed as cancelled.