Direct Debit Rebate. Is this legal?

[Deleted User]

Bullcantona7 wrote: »

I knew I was right NOT to pay these guys commission.

Did the Bank actually warn you that £9K of Direct Debits were unlikely to be incorrectly applied? It seems like a huge amount to "refund" without comment. I assume the DDs were for things like utility bills, mortgage etc?

Bullcantona7

Yeah that's right. They said it's not for them to question the direct debit indemenity claim. They will investigate it with the 3rd party once they have refunded you. He did say however, if you came into the bank and asked to refund mortgage direct debits he would if said "are you sure you want to do this?" But over the phone it does to happen. If you ring up
And say they x amount of DD have been take Out and it's wrong for whatever reason, they will refund the whole amount like what has happened to me.

saver861

dunstonh wrote: »

Its not a widespread fraud and these sorts of thing probably occur across many branches of different banks and the individual staff members may not have picked up a trend yet.

I do believe that the banks do warn in their letter that the money will be collected back if there is found to be nothing wrong.

I would have to say this does seem somewhat out of alignment with good practice. For the bank to pay such large sums back into the customers account with such relative ease, does seem to be facilitating the scam rather than protecting against it!

While I understand about the direct debit guarantees etc, surely it would be more beneficial to withhold the money until the matter is investigated.

This does seem like sloppiness on the part of the banks.

[Deleted User]

saver861 wrote: »

While I understand about the direct debit guarantees etc, surely it would be more beneficial to withhold the money until the matter is investigated.

That's the whole point, the Direct Debit indemnity Guarantee means that the Bank cannot "withhold" the money pending investigation-they have to pay it back immediately the customer complains it has been incorrectly applied. Changing this rule in favour of the Bank would be counter-productive because it would undermine customer confidence in the Direct Debit process.

As I said earlier, I do think Banks should be more pro-active where large amounts are concerned -particularly where regular utility bills and mortgage payments are being called into question.

saver861

Moneyineptitude wrote: »

That's the whole point, the Direct Debit indemnity Guarantee means that the Bank cannot "withhold" the money pending investigation-they have to pay it back immediately the customer complains it has been incorrectly applied. Changing this rule in favour of the Bank would be counter-productive because it would undermine customer confidence in the Direct Debit process.

I am not suggesting changing the rule in favour of the banks. However, I am suggesting the current model, as this case proves, is open to the scam being committed.

Certainly I would have thought there might be a more proficient method of dealing with it such as providing some form of instant guarantee of refunds with interst etc., in the event it is found incorrect payments had been made.

[Deleted User]

saver861 wrote: »

Certainly I would have thought there might be a more proficient method of dealing with it such as providing some form of instant guarantee of refunds with interst etc., in the event it is found incorrect payments had been made.

What you suggest would indeed be changing the rule in favour of banks who wouldn't have to pay until after the investigation. For most customers utilising the DD Indemnity, the amounts are small and the error very likely the bank's. The customer generally needs the refund immediately, not several weeks later.

Bullcantona7

It's a big grey area now and it's starting to be exploited by the scammers

magpiecottage

Please give the name of the fraudsters.

ALIBOBSY

I agree the DD guarantee shouldn't be changed, but the banks could and should let the customer know in clear language (not the usual double speak small print) that it is likely this money will be retaken later or at the very least they will likely still owe the company concerned the money for the service provided.

In the OP's case had the bank insisted on speaking to him after the company rep and clearly explained the above and so did he still wish to proceed with the complaint it may have been enough to make him think twice.

Ali x

ALIBOBSY

magpiecottage wrote: »

Please give the name of the fraudsters.

He mentioned them earlier in the thread as claimsmadesimple.com
I think.

Ali x