Guidelines provided by PASA confirm that you have the right to dispute a debit order if you believe it to be unauthorised. It further explains that your first recourse is to the party with whom the debit order was signed or the party that has submitted the debit order for collection to the bank. Only if this course of action has proved to be unsuccessful, may you approach your bank to dispute the debit order. Once the dispute is received by the bank it will be processed and the client should normally receive value within 2 business days. If the client lodges the complaint after 40 days it will take longer, as the user has 30 days to provide proof of the mandate. Full details of the above are available on their website HERE
The debit order environment is managed by a set of rules called “Clearing Rules”. All banks that offer payment services have to be a member of the Payments Association of South Africa (PASA), a body appointed by the Reserve Bank to manage the payment system participants and the rules. The EFT rules places the onus on the acquiring bank to ensure that its users (those parties that the bank sponsors to submit debit orders to other banks’ clients) abide by the rules. The rules state that a valid mandate must exist (there is a pro forma mandate as part of the rules) in writing – telephone mandates should be followed up by a written mandate.
Apparently, It is impossible for an account holding bank to verify paper mandates before it processes the debit orders. There are approximately 40 million debits orders per month between banks. The banks/ rules therefore allow the client 40 days to dispute or return a debit to its account with no questions asked. It seems a bank cannot prevent unscrupulous entities that target innocent people from submitting debit orders if they come through the legal channels. Banks have an agreement with each other to accept each others payments under the industry rules. The other bank will therefore be responsible to prevent fraud or incorrect debits from occurring. If a company continuously abuses the EFT system an alert will be sent to the sponsoring bank to address the issues, if it continues the acquiring bank will be held accountable and could be fined by PASA. Banks are all a member of PASA and will assist the client within the industry rules to recover any funds incorrectly collected from the client’s account.
If you have debit orders against your account that you feel are illegal, please follow above procedure, and insist that an alert be send to the sponsoring bank.