“South African consumers should still peruse their bank statements for irregularities regarding debit orders, because the new system is definitely not scam-proof,” says debit order expert and lawyer at NuDebt, Brian Blignaut.
Blignaut’s words of caution follow the implementation of the South African Reserve Bank’s (SARB) Authenticated Collections Debicheck system on May 1. The project is part of SARB’s initiatives to modernise the national payment system.
One of the goals of the project is to curb the increasing levels of abuse in the early debit order (EDO) payment system. EDOs are different to EFT debit orders, in that they are processed earlier in the day.
“The system was riddled with fraudulent debit order transactions by rogue businesses,” says Blignaut, adding that there were other abuses too.
“Many consumers used to manage their credit by disputing or stopping debit orders,” says Blignaut.
He explains that in the new payment system, consumers will provide authorisation to their bank through an authenticated mandate to release funds when a debit order is submitted.
However, Blignaut says scammers have already found ways to decode the new system and are ‘going about their business of scamming people out of their money’.
He explains that the new authentication system uses an SMS to communicate with consumers. “The fraudsters are able to duplicate your SIM card and receive a one-time password which they then use to their benefit.”
Despite its shortcomings, Blignaut has welcomed the safeguards that the new systems offers consumers, he told journalist Izak du Plessis.