SOUTHERN CAPE BUSINESS NEWS - A Capitec George client who was the prey of several companies deducting small amounts by debit order from his bank account, without his authorisation, complained to the George Herald.
He was livid when the bank manager told him that there was not much they could do about it.
In response to a query from the newspaper on behalf of the complainant, Charl Nel, head of Communications, Marketing & Corporate Affairs of Capitec Bank, said that the Authenticated Collection Project Steering Committee has been tasked with finding an industry solution to this issue. Here follows his full statement:
Background
Under normal circumstances a client will sign an agreement with a service provider and provide them with their banking details in order to pay for services provided. The service provider will approach a debit order service provider who will act as an intermediary between the service provider and the bank(s). The debit order service provider will approach their bank (the origination bank) who will present the debit order to, in this case, Capitec Bank.
The debit order system has been in place for well over 30 years and was founded on the principle that the bank that sponsors entities into the debit order system will ensure that the entity is credible and has proper procedures and mandates in place to facilitate the debit order. Banks entered into bilateral payment arrangements and have to accept debit orders presented by other banks. The dispute process is unfortunately the only option that we currently have.
Capitec Bank has a sophisticated system with a high success rate to stop further debits from the same user, as we populate the stop process criteria (reference number, user code etc.) from the data received from the debit order that was processed and disputed. The dilemma we have, as do all other banks, is that if the reference number used for the debit order is amended by the debit order initiator the stop will not prevent a further debit from occurring.
Capitec Bank’s dispute process
When a client wants to dispute a debit order, the branches can obtain the contact details for the companies responsible for the debit. Depending on when the amount debited the account, the branches are able to reverse the funds back into the account immediately. As mentioned above, a stop payment instructions can be placed on a disputed debit order(s) to prevent the debit order from debiting again. Should a debit order be disputed within 40 days of the debit order date then the money will reversed immediately. This carries a fee of R 20.00 per dispute.If the debit order date exceeds 40 days from the date of the dispute, then the amount will not be reversed immediately as a verification request must be sent to the external bank. The external bank needs to prove a legitimate agreement exists for the debit order, or alternatively approve the dispute and therefore refund. Please note that there is no guarantee that disputes older than forty days will be credited and these disputes carry a fee of R 25.00 per dispute.
Debit order details and cancellation
Only the service provider can cancel a debit order that they initiated. The Payments Association of South Africa (PASA) states that a client’s first recourse is to the party with whom the debit order was signed or the party that submitted the debit order for collection. Every client is however entitled to dispute a debit order with their bank.
Future enhancements
The head of our Interbank department represents the bank on the Authenticated Collection Project Steering Committee, who have been tasked with finding an industry solution to this issue. He confirmed that the banking industry has been working on a project to introduce a new messaging standard for all retail payments that will provide banks and clients with much better payment information.
The intention is to lodge all debit orders on a debit order database prior to it being presented for payment. This development will enable the paying bank to obtain the authorisation from its client prior to accepting and processing the debit payment. The idea here is to get a once-off authorisation for all future debits under the same reference. This way we can improve the bank's ability to effectively stop all unwanted/unauthorised debits.
It will further help us to identify rogue users that have high dispute/complaint rates and to allow the regulators to take the necessary corrective action, which includes blacklisting the company and its directors from entering and using the debit order system. The expected timeline for the first phase of this project is September 2016 and unfortunately there will still be a period where old debits will still be accepted. The industry is currently doing impact studies with relevant stakeholders on how to best proceed without impacting legitimate users of the debit order system too much.
In conclusion
The above mentioned project is a lengthy and complicated process and we do appeal to our client’s to remain patient with us. As a bank we are doing everything in our power within the current structure and available functionality to stop unauthorised debit orders, provide information on the debit order initiators or service providers and to assist with disputes. Capitec will continue our efforts to ensure you are always in control of your bank account and all deductions.
We strongly believe that unauthorised debit orders should be stopped at point of origin (the originating bank) rather than addressing them from the processes end point– in this case Capitec. While the above mentioned processes are not in operation yet, we all need to put pressure on the banks from whom the debit orders originate.
I strongly encourage clients to vigilantly monitor her bank statement as well as the SMS notifications received to ensure unwarranted debit orders are disputed as soon as possible, and all efforts are made to get them cancelled with the relevant service provider.
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