The scam involves criminals debiting R99 from citizens’ bank accounts without authorisation. And they get away with it too because most banks only notify clients of debit orders and payments exceeding R100. Unless you check your statement regularly, a few of these payments may pass under your radar.
Back in August, banks implemented a program to curb the rogue debit orders by requiring a customer’s confirmation to process a debit order successfully. Xolani Gwala spoke to PASA CEO Walter Volker about the process.
Gwala said that even though authorities say the scam has been “swiftly dealt with,” he still has to reverse the R99 debit orders on a regular basis – sometimes up to two or three fraudulent payments per month. He pointed out the “thugs are persistent” and sometimes the amounts even exceed R100.
Customers are more aware of the scam but criminals are more brazen
Volker replied that the matter is not necessarily worse, simply that the media and consumers are more aware of it now. That’s a good development, he added. Both agreed that the scammers are more brazen as well, and Volker explained that it’s easy to reverse bulk file payments when all transactions in the file are fraudulent. He added:
“Fortunately, those kind of cases are very few and far between because it is quite quick and easy to detect those and reverse the whole file. The majority of the problems are the ones where there’s a mixture of good and bad. Those are far more difficult to deal with because you can’t just reverse the whole file because there could be legitimate transactions amongst the lot of them. Most of the cases that we’re dealing with are legitimate files which contain an element of fraudulent transactions, either coming from a call centre operation or something like that.”
Volker said that when a customer lodges a dispute for a valid transaction, it just slows the entire operation down. When his team follows up, they find that over 90% of the disputes are “actually of legitimate debit orders where there is a valid mandate.”
How do the scammers get your details?
Volker explained that in most cases, the scammers get customers’ details from debit order files sold to criminals by a rogue employee at a service company. The same file and customer details will then be sold and resold between criminal organisations.
It’s seldom a leak on the bank’s side as financial institutions cannot easily be compromised in such a manner. Volker concluded:
“We have never, to date, found any evidence of a bank being compromised. It’s always been from legitimate corporates where that company collects debit orders, and an employee then gets paid a lot of money to make available that list, and then that gets reused a number of times.”
Listen: PASA CEO explains debit order scams