Setting up a fraudulent Direct Debit

Based on the other thread (breakdown in service) that mentions this, how does a crook set up a false direct debit and how common is this? Is the bank not under a duty of care to the account holder to prevent this?

Hi Bronte,

I posted in an older thread regarding Direct Debits. You can easliy set up a Paperless Direct Debit over the phone. Some poeple were shocked at this but the proof is below,

You can contact Bord Gais with your account details and set up your DDebit over the phone - Also i set up my account with Irish Broadband and never had to sign an authorisation, just supply my details.

From Bord Gais's website;

[broken link removed]

Plan-Pay Direct Debit: Spread your annual gas costs across
12 monthly payments. To set up a paperless Direct Debit,
simply call us on 1850 632 632 or sign up online at
www.bordgaisenergysupply.ie

In my opinion the onus is on the banks to check that these "paperless" mandates are genuine - do they peform any checks?

Not that i am aware of? But i am open to correction. I would like to know myself.

Yes, but surely the customer simply asks to see the authorisation for the DD, and if the bank cannot provide it then the bank must refund the money.. is this not correct?

I may have to ring my bank now to see if they'd set up a DD, or do anything on my account without a signature (mine obviously).. or a PIN number...


I had a problem with a fuel card, charged to my account but not relating to me.. I got the signed slip, signed by someone else, the card number had been manually entered, incorrectly, and yet it hit my account number..

I asked how that was possible given that it was a 12 digit number, so there's a 1000 billion numbers, and probably only 100,000 customers at most, so a 10,000,000 to 1 chance of hitting a valid number by guessing or entering incorrectly... they answered that signatures are not checked, my signature is not held on file, (ha ha)...and that all the card numbers share the first eight or nine digits.. so so silly... a major security breach, yet they didn't care... and they haven't changed the system, and it took them two to three months to process the refund....

About a year ago I noticed direct debits to Setanta Sports coming out of my account , it turned out that someone subscribed online using my bank details , all they needed was sort-code and account number which could have been obtained from any of my cheques , as I am a genuine Setanta subscriber I assumed it was a billing problem with my own account , the amount involved was about €70 over a three-month period but just shows how easily this was set-up. I did eventually get my account refunded but only after a lot of hassle and pages of paperwork.

When a company wants to receive Direct Debits they must sign up to the Originator Scheme. This indemnifies the financial institution from having to refund your account. If you see direct debits coming out of your account that you did not set up you should contact your bank and fill out an indemnity claim form which the bank sends off on your behalf so you can get re-imbursement.

My view on this is that, of course, the bank will have to refund the overcharge. But it will take time and effort to pursue this, so it's important not to publish your bank details.

Saves a lot of hassle.

brendan

shilling said:

When a company wants to receive Direct Debits they must sign up to the Originator Scheme. This indemnifies the financial institution from having to refund your account. If you see direct debits coming out of your account that you did not set up you should contact your bank and fill out an indemnity claim form which the bank sends off on your behalf so you can get re-imbursement.

Click to expand...

That's absolutely crazy. The bank should straightaway (within 24 hours) refund you and they should pursue the company that took the money. I would compare it to the situation where if you buy a faulty good in a shop you can go back and get a refund straight away and you do not have to go to the manufacturer.

Really the banks have everything in their favour.

I wonder are we confusing Standing Orders with Direct Debits?

With a Standing Order, you tell your bank to pay money to another account. You can cancel this whenever you want. If the bank pays out on a cancelled standing order, all they have to do is to look at their paperwork and then decide whose mistake it was.

With a Direct Debit, the money is taken out of your bank account. I don't think that the bank from which the money is taken has any involvement in the authorisation. So if a customer says that a direct debit was taken out in error, then they must investigate and can't refund it automatically.