Preventing Debit Order Fraud for Consumers

By Dec 17, 2019Uncategorized

Most salaried people in South Africa have at least one, if not several debit orders scheduled on their accounts – insurance, car payments, internet connection, paid TV and more. We count on the fact that a salary is paid into our accounts, and the bills come off automatically, like clockwork. It makes the admin of life much simpler. It’s a secure, easy way to take care of regular monthly expenses, but what happens when that security is breached?

Debit order fraud is highly prevalent in South Africa, with estimates of anywhere between 10% and 40% of all debit orders being unauthorised or fraudulent. How does it happen, and how can you prevent it?

What is Debit Order fraud?

Many South Africans have been the unwitting victims of debit order fraud, and in many cases, may not be aware to this day that it has happened. This type of fraud occurs when an unauthorised recipient takes an unauthorised debit off your account. These debits are often known as “R99 scams” because of the tendency of illegal operators to take this amount – although it does vary. 

How does it happen?

Criminal operators have many ways to get hold of debit order information – sometimes unfortunately in collusion with bank employees and other people with access to your information. Once they have this information, they process a debit order for under R100, as the banks did not traditionally require authorisation for these.

Such operators may target individuals only once, or may do it multiple times. If the fraudulent debits go unnoticed and unreported, they may keep taking the debit off every month, until it is picked up and stopped.

Fortunately, if you do notice that an unauthorised debit order has come off your account, you can request it to be reversed at the bank. However, there is a time limit of 40 days within which this can be done with no further investigating, so act immediately if you notice a debit you don’t recognise.

How to prevent debit order fraud

Thankfully, South African business is committed to stopping this kind of theft. SABRIC, the banks, companies like Three Peaks and other stakeholders are embracing the roll-out of DebiCheck – a system designed to help make debit orders considerably more secure, and reduce fraud. However, there are steps you can take to reduce your own risk.

1 – Know your debits – Do you know exactly how many debit orders come off your account monthly? Make a list of the regular debit amounts that should come off, so that you can easily notice if something else gets deducted.

2 – Check your bank statements – Good financial health includes checking your bank statements regularly. If you scrutinise them at least once a month, you should be able to pick up anything unexpected or suspicious quickly and easily.

3 – Set up notifications – Most SA banks have the facility to receive SMS notifications every time money is taken from your account

4 – Enter into contracts with care – Legitimate, authorised debit orders can only happen with your consent. However, it is in your best interests to make sure that anyone taking a debit order from your account is ethical. Companies like Three Peaks are registered with PASA and are held to several legal and ethical standards. Only share your banking information with vendors and merchants that you trust, and when you are 100% satisfied about what the debit order is for.

5 – Don’t reverse legal debit orders – Unfortunately, many people reverse legitimate, authorised payments. This often happens if they can no longer afford a contract-based service, or have other financial difficulties. However, this can make it more challenging for legal operators, as they have to then undergo investigation by PASA. This can take up valuable time and resources, slowing down investigation of criminals. If you can no longer afford a debit order, speak directly to the merchant to stop future debits, rather than adding to the challenges of combating debit order fraud in South Africa.