Beware the debit order fraudster

They’re back with a vengeance, so take particular care over the festive season…

The new process of fining the originators of unauthorised debit orders up to R1 000.00 per Debit order has not weeded out the fraud syndicates who continue to defraud unsuspecting consumers.

Fred Steffers, MD of SmartCollect, one of the country’s largest payment systems companies which processes hundreds of thousands of debit orders monthly, said after an initial decrease in fraud some syndicates were back in business using new names and addresses – mostly in and around Durban – plying their trade.

“The holiday season has always been high season for fraudsters and this year will be no different. We have seen a substantial increase in fraudulent activity and have recently closed the accounts of 12 Companies who showed unusually high levels of disputed debit orders which is usually a clear indication of fraud,” Steffers said.

He said many consumers became lax about checking bank statements during the holiday season and fraudsters know that and take advantage of this behaviour.

“There is absolutely no excuse for not checking bank statements thoroughly – even when you’re on holiday. All the major banks now offer on-line services which makes it dead easy to stay on top of things.

Just below R100

“The amounts these fraudsters deduct are usually just below R100 because they know that most banks send an SMS to a client when an amount larger that R100 is deducted thus altering them to the potential fraud.

“An amount of R99 may sound like a small sum of money but when you multiply it by the hundreds of thousands of fraudulent debit orders these fraudsters submit for payment you are talking about serious amounts of money,” Steffers said.

Steffers said his company and other debit order processing companies touched base with each other on a regular basis to exchange information on fraudsters in order to prevent a syndicate from hopping from company to company.

“The interesting thing is the fact that it is the same individuals who keep popping up under different identities. It seems they have found ways and means of evading the law judging by the fact that very few of them have been prosecuted over the years.”

He said it was impossible for the companies who processed debit orders to verify that the mandates on every debit order sent for processing by call centres and other users of debit orders was valid.

“We don’t have access to their databases and even if we did, the sheer volume of transactions that are processed every month would make it impossible to check every single transaction.”

Cracking down on fraud 

The Payment Association of South Africa (PASA) which regulates the debit order industry said banks were planning to crack down on debit order fraud and the role players in the industry.

“We’ve noticed a definite uptick in debit order disputes. While many of them are initiated by consumers who simply can’t pay all their bills at the end of the month and fraudulently cancel their debit orders, many are outright fraud.

He said an investigation had revealed that crooked debit order companies bought consumer data from dishonest company employees who had access to payroll data which included all the information such as ID number, address and telephone number needed to pass a fraudulent debit order.

For more information, please contact Fred Steffers on his cell at 083 268 6779 or e-mail him