Direct Debit question please?

Gavin,_Clear_Academy

Hi,

There is facility under the rules to recover consequential loss and it will usually be paid as long as you can provide proof, however this may not be done as quickly as the repayment of the original amount.

The submission to your credit report is something that the company may do seperately but it isn't anything to do with you Direct Debit agreement, just the underlying contract between you and the company in question.

Mark_In_Hampshire

On the point about consequential losses - as confirmed by BACS, read from bottom to top - sorry it's a bit long, but it does address this specific issue:

Thank you for your email

The guarentee does not cover any charges that you may incure.This would be a matter between yourself and your bank.If you have anyfurther queries please contact Apacs.the governing body of the Direct Debit Sheme and they should be able to assist you .Their telephone number is 0207 711 6200.

Kind regards

Wendy Kimberley

Service Desk

t: +44 (0)870 1650018 / 0100698 (direct)
f: +44 (0)1582 812227
t: +44 (0)870 165 0019 / 870 010 0699 (switchboard)

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From: Mark
Sent: 09 November 2007 11:10
To: Service Desk
Subject: RE: DD question
Hi Wendy,

The wording of the guarantee, and the refund, remains vague and ambiguous. Perhaps an example would help:

As we have clarified, my Bank will not require any evidence or documentary proof from a payee that I have authorised them to debit my account.

I have a balance of £100 in my account.

A payee forwards a Direct Debit Mandate request, not authorised by me, to my Bank who action this, and the payee then requests payment of £200 under this false mandate.

My Bank refuse to pay the Direct Debit because I do not have sufficient funds available, and charge me £39 for doing so. No payment has been made to the payee, so there is no payment to the payee to refund here.

The Direct Debit Guarantee requires my Bank to immediately and without question refund the £39 charge, and any consequential charges, because “in the event of an error, your bank or building society must give you a full an immediate refund of the amount paid”

Is the above the correct interpretation of the protection offered by the Direct Debit Guarantee?

Thanks,
Mark

From: Wendy Kimberley
On Behalf Of Service Desk
Sent: 09 November 2007 10:38
To: Mark
Subject: RE: DD question

Mark

I can clarify that if an error is made your bank or building society must give you a full an immediate refund .

When a company signs up to be a Direct Debit originator they are goverened by the rules of the Direct Debit Scheme and if they contiue to disregard these rules their bank would take up the issue with Apacs who govern the Direct Debit Scheme.

The customer, as explained previously, is covered by the Direct Debit guarentee.

Kind regards

Wendy Kimberley

Service Desk

t: +44 (0)870 1650018 / 0100698 (direct)
f: +44 (0)1582 812227
t: +44 (0)870 165 0019 / 870 010 0699 (switchboard)

we believe it is important to reduce any impact on the environment, and ask that if possible you do not print this email



From: Mark
Sent: 09 November 2007 10:01
To: Service Desk
Subject: RE: DD question
Hi Wendy,

Thanks for your e-mail. With respect however you have not answered the question I posed:

“what safeguard or mechanism exists to prevent the payee from simply going ahead and using the known sort code and account number to set up the mandate a second time without my authorisation”

If no safeguard does exist (the document you sent, and the basis of the DD guarantee describes a remedy for failure, not a safeguard against it):

In the event that the payee does go ahead and set up a DD without my authorisation, and attempts to take funds which are not available, it would at first glance appear that it is the Bank customer who is then liable to pay the Bank’s charges for the failed DD even though the customer is not the one at fault thanks to the lack of safeguards which permitted the error or fraud to occur.

Can you clarify:

“If an error is made by the company or your bank or building society, you are guaranteed a
full and immediate refund from your branch of the amount paid.”

Does this full and immediate refund also oblige and force the Bank to refund their charges to me, or do I need to pay for the payee’s error or fraud – I do not see this clarified in the DD guarantee?

Thanks,
Mark

From: Wendy Kimberley
On Behalf Of Service Desk
Sent: 09 November 2007 09:48
To: Mark
Subject: RE: DD question

Thank you for your email

You are covered by the Direct Debit guarentee which states if any money is taken in error then you are entitled to a full and immediate refund.Please find attached a copy of the Rights and Safeguards to the Direct Scheme

Kind regards

Wendy Kimberley

Service Desk

t: +44 (0)870 1650018 / 0100698 (direct)
f: +44 (0)1582 812227
t: +44 (0)870 165 0019 / 870 010 0699 (switchboard)

we believe it is important to reduce any impact on the environment, and ask that if possible you do not print this email



From: Mark
Sent: 09 November 2007 00:56
To: Service Desk; Bacsservices Webmaster
Subject: DD question
Hi,

I was wondering if you could answer a question I have regarding Direct Debits:

A Direct Debit instruction can be set up over the telephone, in which case, no physical documentation exists that I authorised the instruction, I believe it used to be the case that a signature was required by way of completion of a physical paper form.

In the case of “paperless direct debits”, my Bank simply go ahead on the payee’s say-so and set up the mandate, assuming it to be genuine and authorised.

I then, at some later stage, cancel the Direct Debit mandate by notifying my Bank and the mandate is cancelled. The payee cannot collect further monies under that mandate, as per your FAQ:

Q. Can money be collected from my account after I have cancelled a Direct Debit Instruction?
A. No. The organisation would have to get your authority to reinstate a cancelled Instruction.

My question is: given that the payee does not require any formal authorisation (e.g. a signature) from me to set up the mandate in the first place, what safeguard or mechanism exists to prevent the payee from simply going ahead and using the known sort code and account number to set up the mandate a second time without my authorisation, and then debiting funds in a manner directly contradictory to your FAQ answer above; what part of the system prevents this from occurring?

Thanks,
Mark

YorkshireBoy

Gavin,_Clear_Academy wrote: »

The submission to your credit report is something that the company may do seperately but it isn't anything to do with you Direct Debit agreement, just the underlying contract between you and the company in question.

It's the bank that reports adverse information, ie if the account goes overdrawn (and, worse, unauthorised overdrawn), not the company, ie originator.

What 'protection' does the bank customer have in these circumstances?

davidgmmafan

I believe I was advised once, can't recall if it was on here or on another site, that the DD guarantee is much more complicated than the little snippet we think of when we see the direct debit guarantee. Obviously they can't list every eventuality, its just a brief summary.

IMO if a DD was taken wrongly, particularly if you had no knowledge of the company, then any charges incurred because of this should be cancelled. The problem seems to be when the DD is returned unpaid, the bank shafts you and denis all responsibility.

I was able to get a charge refunded, but this was a paid item fee not an unpaid item fee. I believe the gist of the detailed post I referred to earlier was saying the DD guarantee (ie the full thing) DOES provide for consequential loss, but almost nobody has seen the full thing. Customers just go by the brief statement a company or bank sends. Some bank staff don't even seem aware of that!

davidgmmafan

"They are able to to change the amount or date provided they give you the correct amount of notice."

It was made clear earlier in the the thread the notice element has been virtually eliminated. The guarantee doesn't seem to cover a returned payment AT ALL. The customer has done NOTHING WRONG, the bank HAS NOT DONE ANYTHING, yet they may not back down on the charge.

In the case of a paid item fee you can say the transaction which gave rise to the transaction was reversed therefore how can the charge stand. In the case of a returned item you cannot, yet the payment was at best stup in error at worst it was fraudulent. Card fraud you would be re-imbusred for so why not a (ridiculous) charge the bank has made for doing nothing?

Mark_In_Hampshire

Gavin,_Clear_Academy wrote: »

1. In the BT example the form that you sign to give your authority does not have any dates or amounts on it.

Yes, it does. The customer fills in the form (the formal one with the "dd" logo) and selects a payment date for their plan, plus the amount to pay.

Gavin,_Clear_Academy wrote: »

BT may choose to offer dates however that does not form part of the Direct Debit Instruction.

Yes, it does, because it's on the formal DD form (not BT literature). However, this may have changed now - that was about a year ago. The DD is then fraudulently set up as variable; the payee takes it upon themselves, when authorised to debit X on Y, to tell the bank you've authorised any amount on any date.

Perhaps someone here has a recent paper copy to hand...

Gavin,_Clear_Academy wrote: »

They are able to to change the amount or date provided they give you the correct amount of notice.

The dd form does indeed say "10 days notice, or as otherwise agreed", yes. The latter part of that sentence is the one to watch. Above the tear off fold, in tiny type: "We'll give you UP TO 10 days notice." Would you agree that this means that BT need give the customer no meaningful notice period whatsoever?

Gavin,_Clear_Academy wrote: »

2. It is safer than any other payment method that I can think of any is the only payment method with a money back guarantee. Cash and cheques are very insecure and credit cards are prone to much higher levels of fraud.

Are you asserting that it is safer to supply a third party - who has no responsibility for the running of your account - with open access to take unspecified amounts from it on unspecified dates, or do you think that receiving an invoice and sending a BACS payment is a safer option - in which case, no money back guarantee need apply?

Gavin,_Clear_Academy wrote: »

In the Jeremy Clarkson example it was the fault of Diabetes UK for not correctly undertaking their obligation to validate the identity of the individual as is a requirement of the scheme rules.

The charity receive a DD mandate from someone asserting they are J CLARKSON with matching sort code and account number. Perhaps you can explain how they go about confirming that the person giving the instruction is the Top Gear presenter?

Likewise, someone gives me their sort code and account number so I can send them a BACS payment. Assuming I'm up to no good, what is to prevent me from wandering onto any number of websites and using their known details and name to order goods and services?

Gavin,_Clear_Academy wrote: »

3. The Direct Debit Guarantee tells you that the Bank must give you advance notice of the amount and date that they will be taking the Direct Debit you then have the right to contact your bank and stop it before it is taken if you so wish.

In BT's terms and conditions, your cancellation of the mandate - regardless of why - entitles them to cancel your service outright if they wish to. There's no "qualification of circumstances" in which that might apply. This is not far from being an "attachment to wages" order. However I accept that's BT's disreputable behaviour as opposed to a DD issue per se, though people - to their own detriment - don't often read the Ts and Cs clearly.

Gavin,_Clear_Academy wrote: »

It also says that if they make an error you are entitled to a full refund.

Define "error" - that's a bit vague. If you get a correct invoice for £100 and £200 is debited, clearly a case for the DD guarantee.

If you get an invoice for £100 which should be £10, and thanks to the "as otherwise agreed" part the payment has already been batched and is then debited, and you then invoke the DD guarantee, would you agree that places you in breach of contract with the supplier since you have not reversed the incorrect amount, rather, you've reversed the whole lot and not paid anything?

They just made an error. You breached your contract. And you didn't even make the error. If you didn't use DD, you could make a partial payment of the amount you did owe, without breaching a contract.

Gavin,_Clear_Academy wrote: »

If you use any other payment method you would have no right of recourse via the financial ombudsman.

If you "push" a payment, then there's no need. Credit and debit cards can have charge-backs performed, although I concur with you that recurrent card payments aren't safe either.

Gavin,_Clear_Academy wrote: »

4. The rules are not publicly available as it would then open the scheme up to potential abuse..

I still don't see how that's true. It's open enough to abuse as it is.

Gavin,_Clear_Academy

Hi Mark,

Firstly the problem that you experience with consequential loss is that the banks are not obliged to pay it to you until they recover it from the company. If they refuse to refund the bank then the Financial ombudsman is your best route, as I say provided you can prove it.

Regarding the last part of your message under the rules for Paperless Direct Debit the organisation is not permitted to set up a Direct Debit a 1st or 2nd time without your express authority, if it comes down to your word against theirs "The word of the payer is accepted" and so you would be entitled to a refund from your bank who will then be able to recover it from the company.

Gavin,_Clear_Academy

Hi Mark, If the amount and date from the BT instruction is contained within the "Service Users" Box then it will be disregarded by the bank, if it is anywhere else on the form then it would invalidate the form.

davidgmmafan

What if there's no money to recover as in the returned payment from a company the account holder has never heard of example?

Gavin,_Clear_Academy

BT have to give you the notice that they state in the Guarantee otherwise you will be entitled to a refund. "Unless otherwise agreed" allows them to alter the notice period only with your express agreement.

In the Jeremy Clarkson example the organisation should have sufficient checks in place to establish the identity of the individual. This is known as a "KYC" check or Know Your Customer, if there is a fraud then the organisation has accepted the risk by using Paperless Direct Debit and so would have to refund the genuine account holder.

If BT take the wrong amount then you can only claim back the full amount that they have taken not part of it so it would be difficult for them to site breach of contract if it was their error. I would point out that I am no expert in contract law and cannot comment on their/ your rights outside of the scheme rules.

If you pushed a payment to the wrong account or for the wrong amount, i.e. £100 not £10 then you have no right of recourse. Card payments are a bit hit and miss I agree.

On you last point it is a bit difficult to explain the full details of that without making it public knowledge but effectively it would arm any rogue indivduals who wanted to claim back money where there is no error with a lot of know how.

I can't define error any better than you can really but it is there to explain that you can't claim a refund just because you didn't like the service or you fell out with the company. i.e. if no error has been made under the terms of the Direct Debit rules then you would not be entitled to a refund.