Beware: debit order fraudsters are back

The new process of fining the originators of unauthorised debit orders up to R1,000 per debit order has not weeded out the fraud syndicates, warns a payments expert.

Fred Steffers, MD of payment systems company, SmartCollect, 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.

“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.

“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.”

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.

More on debit orders in SA

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Beware R99 debit order scam in SA

Debit order fraud in SA – report

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Beware: debit order fraudsters are back