Direct debit manipulation

MOH

In the course of a billing dispute with a service supplier, a customer cancels a direct debit , notifying both their bank and the supplier. They continue paying the supplier directly, on time.

The supplier fails to cancel the direct debit and continues to attempt to debit the customer account each month. This is rejected by the bank, as the mandate has been cancelled.

The supplier then circumvents this by submitting the next DD request with an amended UMR (unique mandate reference) - effectively creating a new mandate, with no authorisation from the customer. As the bank believes this new mandate to be a valid one, they debit the customer's account.

Would this be classed as fraud? And if so, who would it be reported to?
The Financial Services Ombudsman seems to only deal with disputes "s between payment service providers and payment service users", although it does mention "other interested parties".

Or is it a Garda matter?

whomitconcerns

fraud..quite simple..althugh i dont know how you would know or prove that they submitted a new UMR. And failing that how you would prove it.

MOH wrote: »

In the course of a billing dispute with a service supplier, a customer cancels a direct debit , notifying both their bank and the supplier. They continue paying the supplier directly, on time.

The supplier fails to cancel the direct debit and continues to attempt to debit the customer account each month. This is rejected by the bank, as the mandate has been cancelled.

The supplier then circumvents this by submitting the next DD request with an amended UMR (unique mandate reference) - effectively creating a new mandate, with no authorisation from the customer. As the bank believes this new mandate to be a valid one, they debit the customer's account.

Would this be classed as fraud? And if so, who would it be reported to?
The Financial Services Ombudsman seems to only deal with disputes "s between payment service providers and payment service users", although it does mention "other interested parties".

Or is it a Garda matter?

Fred Swanson

This post has been deleted.

doublej

The people that run the DD scheme are IRECCL, a division of IPSO.

From what you have written, there is a very serious breach of DD Scheme Rules.

The supplier as the Originator has transgressed but your bank also has a duty of care to you that may not have been fulfilled.

Make contact with IPSO.

ANXIOUS

Once reported DD's will be returned to you within 24hrs.

28064212

doublej wrote: »

Make contact with IPSO.

I previously emailed IPSO asking what penalties applied to originators abusing the SEPA DD scheme using this exact situation. Never heard back from them.

Sounds like the bank, and then the Financial Services Ombudsman should be the next ports of call:

If a complaint relating to an alleged infringement of the SEPA Regulation by a payment service provider is in the first instance made to the Bank, the Bank shall inform the complainant of the right to make a complaint to the Financial Services Ombudsman and to have the complaint determined in accordance with Part VIIB of the Central Bank Act 1942.

In the mean-time, you should contact your bank to reverse the direct debit (if you haven't done this already). They must do this immediately, no questions asked (assuming it's less than 8 weeks since the debit took place).

Then insist that the supplier is put on your blacklist, meaning they can not collect any more direct debits from your account, regardless of UMR changes. Again, the bank are required to provide this functionality, so don't let them fob you off

Fred Swanson

This post has been deleted.

Ravenid

Go here and follow the instructions set out by the IPSO:

http://www.ipso.ie/section/DirectDebitComplaintsProcedure

Get a case number.

Call the Bank complain again and give them the IPSO complaint number.
Call your Service Supplier. Complain again and notify them the call has been raised to IPSO.

The bank will actually do something as there's a statutory body involved.
The company will either get involved too or risk loosing the ability to use the Direct Debit mandate system.

Fred Swanson

This post has been deleted.

Carawaystick

Fred Swanson wrote: »

This post has been deleted.

and the cops

dub45

Ravenid wrote: »

Go here and follow the instructions set out by the IPSO:

http://www.ipso.ie/section/DirectDebitComplaintsProcedure

Get a case number.

Call the Bank complain again and give them the IPSO complaint number.
Call your Service Supplier. Complain again and notify them the call has been raised to IPSO.

The bank will actually do something as there's a statutory body involved.
The company will either get involved too or risk loosing the ability to use the Direct Debit mandate system.

No company will ever be expelled from the dd system no matter what they do.
There are absolutely no consequences and the companies know this very well.

IPSO "work with the companies" their words in correspondence I have had with them.

I believe there is a serious conflict of interest with the banks in their role as sponsoring bank and paying bank. The banks are never going to do anything to upset their big commercial customers and there is no one in the overall dd system to look after the rights of of the bill payer. That's apart altogether from the shocking lack of traning which means that many bank employees including senior level do not know how the scheme works or the rights of the bill payer.

Under the "legacy system" dd rules there was an obligation on the paying banks:

Paying Banks:
o must adhere to the Rules of the Scheme
o must put in place processes which will ensure that unauthorised, refused and/or cancelled
Direct Debits are intercepted and returned immediately on presentation

These supposedly obligatory processes where never put in place. Did anyone care? Who was going to tell the banks they must have these rules?


Also there is no seperate complaints system under SEPA:

"There is no separate complaints system under SEPA. Depending on the nature of the complaint it may be directed through the relevant channels. Bank and Financial Services Ombudsman for banks and to the originator/IPSO/National Consumer Agency for a complaint against an originator."

That quote is from an email from the Central Bank dated 27th May 2014. Great system for the banks and companies - lousy for the bill payer.

dub45

doublej wrote: »

The people that run the DD scheme are IRECCL, a division of IPSO.

From what you have written, there is a very serious breach of DD Scheme Rules.

The supplier as the Originator has transgressed but your bank also has a duty of care to you that may not have been fulfilled.

Make contact with IPSO.

IPSO (now "absorbed" ) will do absolutely nothing.

As long ago as 2010 I asked them if they had sough legal advice on what would seem to be clearly illegal activity:

IPSO acknowledged that they hadn't and furthermore:

Why have IPSO not reported the companies that they are aware of who have engaged in this practise to the Gardai.

Because, as our rules dictate we engage to with the Originator to ensure that proper processes are put in place to ensure that they comply with the scheme rules. If originators continue to abuse the scheme rules they can be suspended or expelled from the scheme. Payers always have the right to escalate to the gardai or the Financial Ombudsman

There isn't even an obligation on any bank employees who become aware of the submission of a cancelled dd to report this to anyone in the bank.

MOH

whomitconcerns wrote: »

fraud..quite simple..althugh i dont know how you would know or prove that they submitted a new UMR. And failing that how you would prove it.

Fred Swanson wrote: »

This post has been deleted.

I'm not sure the UMR is on the statement - mine seems to have what looks more like a unique transaction ID. But the bank would be able to confirm which UMR was presented

doublej wrote: »

The people that run the DD scheme are IRECCL, a division of IPSO.

From what you have written, there is a very serious breach of DD Scheme Rules.

The supplier as the Originator has transgressed but your bank also has a duty of care to you that may not have been fulfilled.

Make contact with IPSO.

Ravenid wrote: »

Go here and follow the instructions set out by the IPSO:

http://www.ipso.ie/section/DirectDebitComplaintsProcedure

Get a case number.

Call the Bank complain again and give them the IPSO complaint number.
Call your Service Supplier. Complain again and notify them the call has been raised to IPSO.

The bank will actually do something as there's a statutory body involved.
The company will either get involved too or risk loosing the ability to use the Direct Debit mandate system.

I *think* that only apples to the legacy DD system. Since the transfer to SEPA, I can't find anything in the SEPA legislation that refers to IPSO. The FSO seems to be the relevant ombudsman, but it's unclear whether they'll take a complaint against a service provider rather than a financial institution.

dub45 wrote: »

IPSO (now "absorbed" ) will do absolutely nothing.

As long ago as 2010 I asked them if they had sough legal advice on what would seem to be clearly illegal activity:

When I was googling for information I came across some of your previous issues with DDs:(
I'd hoped that under SEPA things might have improved, but sadly not. The NCA got back to me yesterday evening and referred me to the BFPI - I'm sorry to hear that's basically IPSO rebranded

Carawaystick wrote: »

and the cops

That's actually one of my questions. Is it civil or could it be considered a criminal matter? Looking at the Criminal Justice Act 2001, it could fall under "Obtaining services by deception". Or possibly forgery, if an electronic DD request is considered an instrument under Section 30(1)(d)

Carawaystick

MOH wrote: »

That's actually one of my questions. Is it civil or could it be considered a criminal matter? Looking at the Criminal Justice Act 2001, it could fall under "Obtaining services by deception". Or possibly forgery, if an electronic DD request is considered an instrument under Section 30(1)(d)

I'd complain and try get a pulse number. it might light a fire under the backsides of the bank&merchant

dub45

MOH wrote: »

When I was googling for information I came across some of your previous issues with DDs:(
I'd hoped that under SEPA things might have improved, but sadly not. The NCA got back to me yesterday evening and referred me to the BFPI - I'm sorry to hear that's basically IPSO rebranded]

I believe that SEPA is a really awful system for the bill payer even worse than the previous one - who would have thought that possible? And it is even more shocking to realise that the Central Bank were heavily involved in its implementation.

I also believe that the whole reinstatement issue of dd's and the fact that it has been allowed to go on for so long rasises serious questions about banking and the law here.

Surely if there is behaviour happening via the banking system which is in any way questionable there is an overriding obligation on anyone who becomes aware of it (and all of the banks and the central bank are aware of it) to ascertain whether this behaviour is legal or not? The Central Bank and the banks should be asking their legal advisers about the legality of reinstating direct debits. If a business or organisation is aware of such questionable behaviour and does not do its utmost to clarify the legality what does that say about them?

In reinstating dd's surely there are also data protection issues? The business concerned is misusing data it holds for other purposes and in cancelling the dd mandate surely the bill payer also implicity withdraws the right of the use of personal data held for other purposes to access a bank account?

Fred Swanson

This post has been deleted.

dub45

It's surprising that none of the consumer or financial journalists have ever taken an interest in exposing the dd system to the Irish public.

People are deliberately deceived into thinking they are 'protected' under the scheme when the reverse is the reality.

hullaballoo

dub45 wrote: »

It's surprising that none of the consumer or financial journalists have ever taken an interest in exposing the dd system to the Irish public.

It's not in the least bit surprising. Any "consumer champions/gurus etc." I've ever seen don't even seem to realise that consumer rights exist as additional rights/obligations to those founded in contract.

dub45

hullaballoo wrote: »

It's not in the least bit surprising. Any "consumer champions/gurus etc." I've ever seen don't even seem to realise that consumer rights exist as additional rights/obligations to those founded in contract.

In my experience its also very disappointing how ready the NCA staff are to trot out Terms and Conditions" as an excuse for not dealing with an issue without even exploring the issue and the relevance to Terms and Conditons.

Tow

You can send reports of "alleged breaches of the rulebooks" to the SMC section of the EPC: http://www.europeanpaymentscouncil.eu/index.cfm/about-epc/sepa-scheme-management/

The complaints email address is it the bottom of the link.

dub45

Does anyone know if the banking systems in other countries are as porous as ours and allow reinstated direct debits to hit customers' accounts?