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Fraudulent debit orders: How to get your money back

Debit orders are very convenient and they save time, but there is a dark side to them. How often do you scrutinise your bank statements, especially if you have a lot of transactions coming through each month?

Marilyn of Rosebank called CapeTalk to say that she discovered that R95 had been taken off her account, via a debit order, by Mhlangaveza Family Assurance (they sell funeral policies - http://www.mhlangaveza.co.za/) without her permission.

It seems this is, unfortunately, a common occurrence

Her bank told her they have many customers with similar experiences and that it has almost become standard business practice for some new businesses to intentionally do this, as a means of marketing their product (it gets the accountholder’s attention!).

This does not sound legal or ethical.

“It’s important for consumers to understand what a debit order entails,” says Advocate Clive Pillay, Ombudsman for banking services. “A debit order is an agreement between a customer and a service provider. In terms of that agreement the customer authorises the service provider to take money out of her or his account for the service provided. The bank is not a party to the agreement.”

How to stop the debit order and get your money back

According to Pillay, if there is a debit order that you have not authorised, all it takes to stop it is a written instruction to end the deduction. You can also instruct your bank to reverse the debit order. Your bank will then check the authenticity of the mandate and, if it was indeed an unauthorised debit order, they will refund your money.

What about the bank costs that you incurred?

“The bank simply acted on a mandate,” says Pillay. “It incurred costs in order to administrate the debit order. Your right of recourse is against the fraudulent service provider. Lots of people have difficulty getting their heads around that one and I can understand that.”

How is the debit order possible if you didn’t sign anything?

“This is a classic example of identity theft,” says Pillay. “The fraudulent company got their hands on your details in some way, but how? That’s for you to find out.”

Pillay says he is not investigating this as it’s outside the jurisdiction of his office.

Moral of the story? Take the time each month to inspect your bank statements; then promptly inform your bank if you suspect fraud. The onus is on you!


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