AUDDIS Direct debit system being abused by NPower?

zerog

The most likely situation is probably some npower call centre staff mistyping an account number that was given to him over the phone, or the customer saying his account number incorrectly. How many times have you given a number over the phone for the person to read it back to you incorrectly?

Fraud is also possible, but probably not as common as everyone thinks

innovate

The Direct Debit guarantee protects the account holder 100%. You get your money back immediately if you inform the bank that the DD was not authorised by you.

Anyone who cares about their financial affairs will check their current account(s) regularly and will soon spot any transactions that shouldn't be there. No Direct Debit - taking organisation has even the remotest interest of defrauding anyone since this would be the end to their company's ability to collect payments at a reasonable cost. It might even mean the end of the company, so they wouldn't ever try it.

To call for changes to a perfectly good DD system because the odd mistake and/or fraudulent attempt happens is a vast overreaction.

Gromitt

dtaylor84 wrote: »

Yes, he was wrong and arrogant and deserved to be shown up, but it is ridiculous that a direct debit can be set up so easily.

Even though its so easily to tell the bank "Hey, this DD isn't mine, please cancel it and refund" ?

Would you prefer to increase the cost of the DD system by forcing additional steps to be taken? Costs which then those companies will pass on to us customers? For the 1% (probably less) of incorrect DDs that are setup?

marlewuk wrote: »

its the dd originators responsibility for verifying the customer's identities via methods such as credit reference checks, cross-referencing with the electoral register or their own historical customer records.

Ok, I've typed in my name and address. They check it with various credit agencies, pass, they cross reference with the electoral register, pass, with their own historical customer records, pass. Then they enter the account number and sort code, which happens to be my partners that I typed in by accident. How does your system prevent this? They can't check with the bank as that would be against data protection regulations.

grumbler

innovate wrote: »

The Direct Debit guarantee protects the account holder 100%. You get your money back immediately if you inform the bank that the DD was not authorised by you.

In fact many banks are not as good as you say in immediate refunds. And it can get far more complicated with charges caused by an unauthorised DD.

Anyone who cares about their financial affairs will check their current account(s) regularly and will soon spot any transactions that shouldn't be there.

So, everyone who have more important things to do rather than to 'care' about their bank account has to be prepared to get robbed even if taking maximum precautions with bank cards and online banking?

No Direct Debit - taking organisation has even the remotest interest of defrauding anyone since this would be the end to their company's ability to collect payments at a reasonable cost. It might even mean the end of the company, so they wouldn't ever try it.

Yes, but some of their customers do have such interest, and companies&banks do nothing to prevent this. And you know well that many companies don't hesitate to reinstate without authorisation DDs cancelled on bank's side. Have you ever heard of any customer or any company punished for taking advantage of this 'perfect' system?

To call for changes to a perfectly good DD system because the odd mistake and/or fraudulent attempt happens is a vast overreaction.

How can a system be perfect when anybody can easily take money from your account without even letting you know? You can get your card rejected in the middle of nowhere and then wait until your bank refunds all the money and charges 'immediately'
The system was not perfect with paper mandates and got only worse without them.

innovate

You are making a massive mountain out of a molehill. Tens of millions of DDs go through correctly every year. Occasionally, there is a problem, often due to human error. The DD guarantee exists for such errors.

However, if you have a much better system to offer, why don't you take it to the banks and the Payments Council? Complete with the business case that convinces them that it would be a good investment. Also, how would your much better system eliminate human error?

BTW, a system that forces people to pay their bills from accounts in their name is not much use to some folks - e.g. parents paying bills for their student children, children paying bills for their elderly parents etc.

grumbler

innovate wrote: »

You are making a massive mountain out of a molehill. Tens of millions of DDs go through correctly every year. Occasionally, there is a problem, often due to human error. The DD guarantee exists for such errors.

When someone gets hit as a result of an error of fraud, they don't care about 'tens of billions' that apparently are happy to be fine.

However, if you have a much better system to offer, why don't you take it to the banks and the Payments Council? Complete with the business case that convinces them that it would be a good investment. Also, how would your much better system eliminate human error?

The system is pretty obvious and was already discussed here. In brief:

• I give some company a permission to set up a DD.
• After the company does this it appears in my bank account inactive and waiting for activation.
• I activate it online or over a phone.

In fact it's just one extra field in the database record, but apparently it's far too laborious and expensive task for our banks to add this extra field to their databases and to adjust the online banking a little .

BTW, a system that forces people to pay their bills from accounts in their name is not much use to some folks - e.g. parents paying bills for their student children, children paying bills for their elderly parents etc.

I have never suggested this.

innovate

grumbler wrote: »

The system is pretty obvious and was already discussed here. In brief:

• I give some company a permission to set up a DD.
• After the company does this it appears in my bank account inactive and waiting for activation.
• I activate it online or over a phone.

In fact it's just one extra field in the database record, but apparently it's far too laborious and expensive task for our banks it add this extra field to their databases and to adjust the online banking a little .

How much would it cost to implement and maintain this? Tens of millions across the industry. We all know who would pay the bill for this project, too.

And what would be the benefits once the changes had been made? That people have to carry out tens or hundreds of millions of extra transactions to set up their DDs? I can just see the posts on MSE screaming blue murder because "my bank didn't pay my electricity bill in time", "I didn't know I have to confirm my agreement twice", "my bank never told me I need to confirm" etc. Plus, there could be many genuine cases where people were unable to confirm in time for a payment.

Your additional step just creates unnecessary problems. It' s a bit of a sledge hammer to crack a nut.

grumbler

innovate wrote: »

How much would it cost to implement and maintain this? Tens of millions across the industry.

Was it not you who suggested me to "take it to the banks and the Payments Council?"
In fact it is the smallest possible change to implement and if it was done along with AUDDIS implementation it could have probably cost nothing on the top of other related costs.
Anyway, the systems are constantly being improved.

And what would be the benefits once the changes had been made? That people have to carry out tens or hundreds of millions of extra transactions to set up their DDs?

What 'transactions'? For me it will be just ticking a tic box for every new DD, and I have less then 10 of them running. And it's just one-off activation for a DD when it's being set up.

I can just see the posts on MSE screaming blue murder because "my bank didn't pay my electricity bill in time", "I didn't know I have to confirm my agreement twice", "my bank never told me I need to confirm" etc.

Well, until now agents keep reading me the DD guarantee over a phone even after I tell them that I know it by heart. This time can be spent much better on telling a customer that the DD has to be activated.

Plus, there could be many genuine cases where people were unable to confirm in time for a payment.

If they are unable to confirm then it's their problem to pay by other means. It's not the end of the world.

Your additional step just creates unnecessary problems. It' s a bit of a sledge hammer to crack a nut.

Traffic lights for pedestrians are very expensive and create unnecessary problems too, including extra noise and pollution.

innovate

Seems we have to agree to disagree over this, not least since you don't appear to understand what I am saying, and since you appear to have no appreciation about the gigantic costs involved in an industry-wide project like this would have to be. It's ludicrous to say because systems are being constantly improved they should be improved for matters for which there exists no positive business case.

You are proposing to waste a whole lot of money on a new approach, and create a whole lot more work for tens of millions of people, just so that a handful of people a year don't have to enact the DD guarantee.

Out of curiosity, would your system do away with the DD guarantee? And presumably you would have to re-confirm your DD every time the DD amount changes (e.g. monthly, if you pay your credit card in full by DD)? Also, those paranoid about incorrect Direct debits can check their accounts online, usually 24x7, and just cancel any they don't like. I do concede that there are one or two banks (Natwest, First Direct) who could perhaps improve how they handle DDs, by showing them as soon as the mandate has been set up, and not just after the first payment has been made. On the other hand, I haven't heard of unauthorised DDs through these banks, so that might be the reason why they don't feel this is a priority for their customers.

grumbler

innovate wrote: »

... gigantic costs involved

Absolutely groundless statement.

... a whole lot more work for tens of millions of people

I don't understand what you mean.

Out of curiosity, would your system do away with the DD guarantee?

Perfectly. DD guarantee is mainly about taking payments, not about setting a DD.

And presumably you would have to re-confirm your DD every time the DD amount changes (e.g. monthly, if you pay your credit card in full by DD)?

Absolutely not.

Also, those paranoid about incorrect Direct debits can check their accounts online, usually 24x7, and just cancel any they don't like.

The main problem now is for people that have more important things to do than keep checking their accounts 24x7 for everything including small unauthorised transactions that can easily come unnoticed. I think it would be correct to assume that if they follow all security steps (or never use their card at all) they can assume that there is no need for scrutinizing all transactions.

I do concede that there are one or two banks (Natwest, First Direct) who could perhaps improve how they handle DDs, by showing them as soon as the mandate has been set up, and not just after the first payment has been made.

Add Santander to your list. EDIT: I misunderstood you. Santander does show the DDs as soon as they are set up.