LA/LL now demanding payment by DD

kinger101

stator wrote: »

Thanks for all the replies.

As I understand it, if you dispute a DD payment the bank will refund you, then contact the payee. If the payee confirms the payment was correct the bank will take the payment again and there's nothing you can do.

Not quite the case:

How to dispute an indemnity claim

Merchants may not agree that an indemnity claim should be upheld. Within the Direct Debit scheme there is limited scope for appeal, but fraudulent indemnity claims can be dealt with in the courts.

The only grounds to dispute an indemnity claim within the Direct Debit scheme itself are:

The customer's bank has made an error in raising the indemnity claim. For example, the customer's bank may have mistakenly sent the same indemnity claim twice.

The customer's bank failed to inform the merchant after the customer's mandate was cancelled, and then allowed payment to be taken under the cancelled mandate. In this case the customer's bank are liable for the indemnity claim, as they are responsible for it.

The customer claims they never signed a Direct Debit Instruction, but the merchant can produce a signed paper DDI, which the customer then accepts.

Such counterclaims must be submitted to your sponsor bank within 14 working days of an indemnity claim being settled. Any counterclaims made after this deadline will be automatically rejected.

To make a counterclaim under the Direct Debit scheme you will need to provide your sponsor bank with the following details:

The date and amount of the indemnity claim
Your bank account details, SUN and reference number
A copy of the indemnity claim
If the claim succeeds, it can take another 120 days for the funds to be refunded to you.

Given the limited scope for appeals within the Direct Debit scheme, most disputes happen outside of it. The Direct Debit Guarantee does not impact any contractual agreements between a merchant and their customer, and fraudulently charging back a Direct Debit payment is a criminal offence, covered by the 2006 Fraud Act.

From here;

https://gocardless.com/direct-debit/guarantee/

For this reason, IMO it's unwise for a LL to collect rent via DD. Fraudulently charge-backs seem rather too easy. This thread sums up the risk:

https://forums.moneysavingexpert.com/discussion/5306899

DD is fine if you're a utility company, and have the resource to absorb the loss or take action in the courts. It could turn into a nightmare for a LL if the agent whose bright idea it was to collect via DD isn't willing to accept the increased risk.

His_Dudeness

I disagree with those who say that, for a tenant, paying by DD is better than paying by SO.

The DD guarantee makes DD mostly safe but paying by SO or normal bank transfer is still the safer option. Why?

Because with a SO/bank transfer you control whether the payment is made at all, and you control the amount. This is still better than letting the other party do what they want even if you have a guarantee that you can call back the payment.

G_M

His_Dudeness wrote: »

I... paying by SO or normal bank transfer is still the safer option. Why?

Because with a SO/bank transfer you control whether the payment is made at all, and you control the amount. This is still better than letting the other party do what they want even if you have a guarantee that you can call back the payment.

I think this used to be true, but nowadays:

* you can cancel a DD payment yourself via your bank at any time, just as you can cancel a SO
* if you forget to cancel a SO (eg at end of tenancy) there's not much you can do other than ask the LL o refund, whereas you can request your bank refund a DD which should not have been collected
* if the LL/agent increases the amount they take via DD they must first inform you (and you can then cancel if you wish as above) otherwise you can reclaim (as above)

However I agree that there's a comfort factor in knowing you set up the timing and amount of payments yourself with SOs.

kinger101

His_Dudeness wrote: »

I disagree with those who say that, for a tenant, paying by DD is better than paying by SO.

The DD guarantee makes DDt mostly safe but paying by SO or normal bank transfer is still the safer option. Why?

Because with a SO/bank transfer you control whether the payment is made at all, and you control the amount. This is still better than letting the other party do what they want even if you have a guarantee that you can call back the payment.

People do forget to cancel standing orders at the end of tenancies though. In that sense, with the guarantees provided by DD, it is superior. Both are good methods for the tenant though, and reduce the risk of late payment due to forgetfulness.

DandelionPatrol

kinger101 wrote: »

For this reason, IMO it's unwise for a LL to collect rent via DD. Fraudulently charge-backs seem rather too easy. This thread sums up the risk:

https://forums.moneysavingexpert.com/discussion/5306899

DD is fine if you're a utility company, and have the resource to absorb the loss or take action in the courts. It could turn into a nightmare for a LL if the agent whose bright idea it was to collect via DD isn't willing to accept the increased risk.

That thread is seminal reading on the subject. Thanks for finding it, 'cos I was thinking I would have to do it.

Based on that thread, if OP's LL saw it, you might find the Agent instructed to back down. The rough summary was that the OP of that thread is a LL whose agent decided to take payment by DD. The tenant fraudulently reclaimed the DD for a number of months [and disappeared IIRC]. Money was taken from the Agent, who then asked LL to make good their losses and indicated that they would sue.

His_Dudeness wrote: »

I disagree with those who say that, for a tenant, paying by DD is better than paying by SO.

The DD guarantee makes DDt mostly safe but paying by SO or normal bank transfer is still the safer option. Why?

Because with a SO/bank transfer you control whether the payment is made at all, and you control the amount. This is still better than letting the other party do what they want even if you have a guarantee that you can call back the payment.

Yes. SO is good for tenants and for LL

His_Dudeness

kinger101 wrote: »

People do forget to cancel standing orders at the end of tenancies though. In that sense, with the guarantees provided by DD, it is superior.

Hmm, so having to check all the time for accurate DD payments, having to call the bank and explain in case of error, etc, is OK because one might forget to cancel a SO... That's one way to see it.

It is not about a 'comfort factor' for me: It is my account and my money and I control what is taken from it unless I trust enough that the other party is serious. Letting agents do not fall into the 'trusted enough' category.

It is much easier and safer to give the go ahead for any money to leave than to check and call back money that left in error. Especially for rent, which is the same amount for every payment.

kinger101

His_Dudeness wrote: »

Hmm, so having to check all the time for accurate DD payments, having to call the bank and explain in case of error, etc, is OK because one might forget to cancel a SO... That's one way to see it.

It is not about a 'comfort factor' for me: It is my account and my money and I control what is taken from it unless I trust enough that the other party is serious. Letting agents do not fall into the 'trusted enough' category.

That's fair enough. I think agencies are only serving their own interests by moving to the DD system. Surely for the fees they charge, they ought to be able to check their statements to ensure tenants have paid.

stator

Ok forget about whether DD is the best payment method or not, I guess it's a matter of choice.

But do you think the agreement above could be interpreted that they can force whatever payment method they wish?

DandelionPatrol

stator wrote: »

Ok forget about whether DD is the best payment method or not, I guess it's a matter of choice.

But do you think the agreement above could be interpreted that they can force whatever payment method they wish?

As there is no actual method of payment specified, I would say that the clause is actually silent. For it to allow them to force you to change to DD now, it would need to say something like

To pay the Rent at the times and in the manner specified by the Agent from time to time.

chris_m wrote: »

Only potential problem with that is that they'd probably still charge the £30 for not using DD.

As the agreement cannot be construed to justify DD, there is no breach of agreement and £30 is not chargeable.

The risk is that the Agent will ultimately serve a S21.

His_Dudeness

OP said he has been paying by standing order, so I am guessing that this was the method of payment specified at the time.

The letter from the agent is just a classic example of the way they often draft letters: Very directive and warning of fees for non-compliance where the reality is that they are just requesting and cannot do anything if their request is refused.

Even if a s.21 notice is served as a threat, I doubt the landlord would evict.