Addressing 'unauthorised' debit orders

By Staff Writer
We’ve all fallen prey at some stage or another to various companies calling us to advertise some special that they cleverly disguise with jargon and loads of small talk, and in our state of wishing the call to be over we agree to more than we should. This we unfortunately only discover come pay day when we notice a debit order going off that we don’t remember authorising.
 
“Many consumers agree to buying goods or services over the phone yet are unaware that these verbal contracts can be legally binding and may have financial implications,” said Paul Brown, CEO and founder of DigiCash.
 
DigiCash is a registered third party payment provider that processes payments and collects debits on behalf of merchants.
 
Debit order mandates
 
Brown suggested that most consumers expect ‘debit order permissions’ or mandates, to be synonymous with endless paperwork, but that isn’t always necessary in legalising the mandate.
 
“A telephonic mandate is just as legitimate as a paper one, but all mandates need to contain certain information to be enforceable,” stated Brown.
 
This information includes:
-The consumer’s name,
-Confirmation of merchant and the consumer’s authorisation pertaining to the debit,
-Agreement on amount to be deducted,
-Reference number,
-First and succeeding debit order dates,
-Consumer’s ID number, and
-A code that enables the consumer to identify the company that has conducted the deduction.
 
Protection measures
Next year will see the implementation of an ‘automated-mandate verification system’. This forming part of the double-opt-in system, explained Brown.
 
The system will make it possible and easier for banks and other payment providers to confirm that a debit has been properly authorised by the consumer before processing it.
 
Consumers will also better be able to manage their financial agreements and mandates, as the system will provide them with secondary communication for example SMS or email, to confirm the debit order.
 
“When this system comes in, it will be harder to lock consumers into a deal without them realising what they are getting into. All these changes will better protect the consumer and ensure that they know what they are getting into when they agree to a contract,” noted Brown.
 
Electronic mandates
 
Another protection measure will take the form of electronic mandates.
 
“The e-mandate will make it possible for consumers to shop online without having to enter their bank details repeatedly and comes with built-in safeguards. Because it will be electronic, it will also be easier to source the original permission document quickly,” said Brown.
 
According to Brown the following are ways in which companies can better guard consumers’ interests:
 
-Vetting merchants to make sure their processes are above board, and holding them accountable if they fail to produce proof of consumer authorisation.
-“When a consumer queries a debit with us, we give the merchant up to 48 hours to get back to us with proof of the deal, or we reverse the amount and charge the merchant,” said Brown.

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