Over 97,000 Brits have fallen victim to criminals setting up fraudulent direct debits from their accounts, with this number set to escalate over the next three years, according to research from insurance outfit LV=.
Is this about the never-ending fraud spiral, or mis-information precisely aimed at instilling fear into corporate decision makers so that they will be more likely to spend money protecting stuff that doesn't actually need protecting.
Paying for an insurance policy using a direct debit on someone else's current account has got to be the most stupid criminal activity possible. As soon as the victim realises what's happening and notifies the bank, they get their money back and the insurance
becomes null and void: if it was for car insurance, the idiot crim is potentially breaking two laws at once. Brilliant!
Also got to say that LV= must take some of the blame for allowing it to happen in the first place. Do they not check who they are providing insurance to?
Now, is it true that I can set up a Direct Debit from another person's bank account into mine? This post seems to me to imply that it is possible. I don't think this is the case. Is this another example of the plausible being passed into the mainstream
as an actual?
Is this really just a lot of frightening words around something that really isn't a problem.
This all emanates from the crazy idea to allow the set up of Paperless Direct Debits. Organisations must be compliant with AUDDIS (Automated Direct Debit Instruction Service) and are responsible for verifying their customers' identity - but of course they
don't bother - just like the sub-prime Mortgages not bothering to vet Income.
No-one has ever verified my identity, hence why I check my D/Ds quite religiously.
I notice that BACS made electronic rather than paper format mandatory from 1st January 2008 for all new service users.
So not rocket science to predict where this is going.
I would say that the statements and allegations made in the CEBR report are , at best, questionable. However, it is only prudent for all organisations to protect themselves against fraud. Customers under the direct debit scheme are protected by the direct
debit guarantee, however corporates and SMEs signing up customers should ensure that the details they are provided with are correct. The Service User's Guide explains how to do this and there is further information available from
www.directdebit.com. It is true that paperless direct debits make it harder to determine the identity of the payer but the industry has addressed this and there is a range of suitable products available. Service Users
are able to log into www.bacs.co.uk to obtain further information. This will help organizations offer a better service to their customers and reduce the level of indemnity claims received - maximizing cashflow.
No system will ever be fully protected from the determined fraudster but to put things in perspective, there are over 3 billion direct debit transactions occurring in the UK every year and this number is growing. No organization thinking about implementing
direct debit should be put off doing so, as the benefits far outweigh any perceived risk from fraud. The paperless direct debit scheme has been operating successfully in the UK for many years now and is a robust, safe and convenient payment method for customers
and businesses alike.
Just over one hour ago I found a fraudulent new direct debit on my current account. I called my bank and have spent most of the time since navigating my way through countless telephone corridors. Fraud dept tells me it can start work on recovering the money
I have already lost, but cannot help with preventing more DDs from being set up. I need to speak to my branch... who are "not answering just now" (verbatim quote). Finally got through to the branch who inform me that they can stop the account from operating, or
just let it carry on paying out whatever DDs (and whatever else) my thief fancies having... "which would you like, sir?".
Apparently, the old fashioned process of telling an accountholder when a new DD or SO has been set up is no longer followed.
I am going to St Paul's, where common sense still counts for something.
CompetitiveNew York City, NY (USA)
© Finextra Research 2015