Clever crooks are robbing unwary bank account holders of hundreds of rands, warns consumer watchdog Georgina Crouth.
Johannesburg – Rather than storing our cash under the bed for safekeeping, many of us entrust banks to keep our money, in the hopes it will be safer and might even earn us interest.
But how safe is your account really – not only from hacking but from unauthorised debits, which have become a lucrative industry for crooks.
Readers caught in the scam accuse their banks of being unable – or unwilling – to stop the fraud.
Christelle Harris, of Somerset West, wrote to me last week, complaining that when small amounts started being debited from her account, her bank seemed to wash its hands of the situation: “I receive payment notifications on my phone, so I don’t look at my statements as often as I probably should.
“Until recently, when I went into a branch to print three months’ statements for a credit application and I noticed odd amounts being regularly deducted.
“When I asked the service consultant about the debits, she dismissed it and said I must have signed something.
“But I would have remembered signing debit order instructions.
“Someone has managed to dip into my account, taking small amounts at a time, for months. It adds up. What’s been done is criminal – I never gave anyone permission and now the onus seems to be on me to prove I haven’t signed the instruction.”
Emmanuel Moncho, of Pretoria, had a similar experience but, in his case, the crooks were greedy, helping themselves to his bank account a few times a month.
“I noticed an amount of R49 going off on the first of the month; then, on the 25th, R59; and the 30th, R55. Same company.
“No one could give me information about them – a company I’d never heard of, even.
“And odd amounts. It wasn’t as if I signed up for those cellphone value-added services or something.
“I reversed the charges. Luckily, this didn’t cost me but if you don’t keep an eye on your account, the banks won’t either.
“They really don’t seem to be too concerned about it.”
Placing a stop payment against a company or individual is only helpful if they don’t attempt to debit under a different name, as Sheila Ingram, of Joburg, discovered: “I’m a pensioner so losing R49 a month matters to me. Over the past 10 months, the same company has tried stealing R490 from me.
“I had the debits reversed but it means I need to go into the bank.
“So I put a stop payment against the company and the amount – the very next month, another company would debit another amount (R49,50).”
Clearly these small amounts are adding up to a fair chunk of change because banks process in the region of 56 million debit orders each month.
Of those, the Payments Association of SA’s chief executive, Walter Volker, says between 800 000 and a million inter-bank debit orders are disputed every month.
Volker told me the R99 scam has been around for a while: “A variety of different scams to abuse the EFT debits (debit order) and non-authenticated early debit order (Naedo) have been around for many years now. The amounts deducted fraudulently are generally relatively small, ranging from R49, R99, R149, and so on.
“The so-called R99 scam is popular primarily because this is below the ‘in-contact’ notification offered by most banks – and is thus utilised by the unscrupulous users with the hope that no notification of such a transaction would be sent to the consumer/ account holder. (The fraudulent debit order or Naedo is then only picked up when a consumer receives his/her statement or checks via internet banking, etc).”
But despite the perception banks are turning a blind eye to the abuse, measures have been implemented over the past few years to curtail abuse.
“The dilemma is trying to keep a balance between greater access to a very efficient payment system, and maintaining levels of security and consumer protection.
“(We now require) each user to register directly (instead of hiding behind another user), with their own abbreviated short name – also to ensure that the user can be easily identified if there is a consumer query.
“The levels of disputes and unpaids are monitored by the banks and Pasa for each of these users.”
Banks have the ability to block any users if they deem them to be too risky, or their ratios are too high. In addition, banks can register the user on a debit order abuse list, which would warn other sponsoring banks not to take on such rogue users.
“Since March, Pasa has started calling for samples of mandates from users identified as possible rogue users, and fined the sponsoring bank R1 000 per mandate that is missing or deficient in terms of core criteria. To date, Pasa has issued fines amounting to a few million rand.
“By end of September next year a new system requiring electronic authentication for any new early debit order prior to it being lodged on the mandates database, and prior to releasing the payment instruction, will be implemented.”
So, no more paper-based or voice-based mandates will be possible for early debit orders after October 1 next year.
“All EFT debits are sponsored by one of the current sponsoring banks.
“They pose as legitimate businesses, and it then takes a few months of monitoring before the rogues are detected and then taken out of the system.
“Because most users get their money back as soon as they complain, they are unwilling to go to the trouble to opening a case; the police often are unwilling to investigate a case that is so small.”
There is evidence that these “rogue users” are buying lists from people who have access to the financial data of customers.
“These include trade unions, clubs, gyms, even cellphone companies, insurance companies.
These instances, are, however, difficult to prove in court.”
Wise up. Here’s how!
* Keep track: Pasa says consumers should regularly review deductions made from their current or savings accounts and make sure they understand who the user/ beneficiary is, that the amount is correct, and that the deduction date is that which was agreed upon.
Should account holders be unsure, they should approach their own bank to obtain details of the user.
* Something amiss? If there appears to be an illegal deduction, dispute the transaction.
If the deduction is challenged within 40 days of the statement date, funds will be reimbursed immediately.
After 40 days, the sponsoring banks have 30 days within which to provide the legitimate mandate. If this is not done, the funds will be reimbursed.
Pasa says consumers are fully protected but it is their own responsibility to monitor deductions from their accounts on a regular basis.
* Don’t get caught: Consumers should also be wary when dealing with call centre agents.
Don’t give out personal, financial or banking details unless you are clear on the terms and conditions and the product/service being sold.
* Be firm: If you are unsure or disagree, make sure you explicitly say no.
However, even in such cases if the subsequent transaction is disputed, the burden of proof is on the call centre to prove the mandate meets the core criteria before it is considered legitimate.
* Stay informed: Subscribe to your bank’s SMS notification services so you know about each and every transactional activity on your account.
* Still unhappy? If you feel aggrieved by not getting assistance from your bank, you can also approach the Ombudsman for Banking Services.
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected] or follow on Twitter @askgeorgie.