100 telemarketing companies blacklisted for bogus debit orders

© juniart - Fotolia.com

PASA chief executive, Walter Volker said a full-scale effort was underway to weed out the rotten apples in the industry that resulted in more than 120,000 of the 31 million payment orders processed monthly being disputed by consumers.

Tracking rogues

Once a telemarketing company was blacklisted by PASA, the names, ID numbers and physical addresses of the owners and directors were listed. "We have found on a number of occasions that the same operation would appear under another name but with the same directors or operate from the same premises with uncles or aunts appointed as directors. By keeping track of address details as well as ID numbers is makes it easier to spot when they reappear under a different guise."

Volcker said banks should be far more involved in educating the public to check and verify that all deductions made on their bank statements are valid and were not the result of fraudulent debit orders being passed without their knowledge or consent.

Fred Steffers, MD of one of the largest payment systems companies in South Africa PS&S, said that in some cases crooked telemarketers submitted payment lists for which they did not have valid mandates to deduct the money. These bogus instructions resulted in the debit orders having to be reversed at some considerable cost to his company.

Using its proprietary SmartCollect system, PS&S is able to process hundreds of thousands of payment orders monthly, which was how it first identified the problem. "We are dealing with a major problem where fraudsters are setting up cottage industries where they use banking details obtained illicitly to defraud the public on a massive scale. We recently had to blacklist a number of companies because of the very high rejection rate of payment orders by the banks concerned where clients disputed the deductions."

Unsophisticated consumers at risk

Both Volcker and Steffers made the point that relatively unsophisticated consumers were at the greatest risk because they lacked the knowledge of how to dispute illegal debit order deductions, which often required several telephone calls to both the banks and the telemarketers who often refused the reverse the deduction.

Volcker said bank call centres were often unhelpful in dealing with such issues because call centre personnel were inadequately trained to assist clients effectively.

Dealing with unauthorised debits

Steffers said if a consumer detected a fraudulent deduction on his or her bank statement the first step should be to demand a copy of what is termed a mandate. In the event of a telemarketer, this would be in the form of a recorded version of the telephone conversation, where the consumer explicitly authorised the telemarketer to deduct the payment from his or her bank account

"If the company who submitted the debit order fails to respond, banks are mandated to reverse the transaction if the consumer lodges a dispute with the bank within 40 days. I would also urge consumers who have been defrauded to register a case of fraud against the telemarketer with their nearest police station so that legal action can be taken against these scammers," Steffers said.

In order to prevent further payment orders being passed by the bogus telemarketing companies, PASA has compiled what it calls "an abbreviated short name list" listing all the telemarketing companies that have abused the system. This makes it easier for banks to identify the bogus transactions and makes it impossible for future debit orders to be passed from that entity, Volker added.

One shortfall of the PASA Bad User List is that members of the public will not have access to it. "For legal reasons it is only being made available to banks so that they can identify debit orders emanating from these blacklisted entities and stop payment before it is processed," he concluded.