Check your monthly bank statement carefully - you could save lots of money.
When Cape Town businessman Bill Clayton discovered that R545 had been deducted from his account for maths lessons which he knew nothing about, he queried the transaction with his bank, First National.
It emerged that a stranger submitted Clayton's bank details on a debit order instruction form in favour of a maths lesson franchise company. Though the stranger provided his name on the debit order instruction, the bank did not check that it matched the account number.
The company, Master Maths, repaid the money to Clayton as soon as the error was pointed out.
Ellen Roberts, owner of Master Maths, in Claremont, says she submitted the details supplied on the debit order instruction form "in good faith" to the bank via a debit order processing bureau.
The incident highlights both the dangers of using debit orders and the need to check your account statement carefully.
If Clayton had not checked his monthly statement, the money could have been deducted from his account for months, without anyone being any the wiser.
Banks rely on shops and merchants collecting the debit order to make sure the details are correct.
The bank's computers do not even cross check that the person who signed the debit order is the legitimate holder of the account. And they take no responsibility for errors in details submitted through the debit order system.
Ann Bramhill, spokesperson for First National Bank, says it is the merchant's job to ensure that the details are correct. One way in which this can be done is to ask for a cancelled cheque.
Debit orders are submitted to the Automated Clearing Bureau (ACB), which processes them. Your bank is not involved in the processing and does not even know what is being debited from your account, she says.
The bank assumes that debit orders submitted by companies who have signed an agreement with the ACB are genuine and that the companies have genuine mandates from you to debit your account.
Jenny Smith of Absa says the bank may request a copy of the debit order instruction but does not validate its authenticity.
You do have the right to dispute the debit order and the bank will reverse the transaction if you notify the bank within 30 days of the money being deducted from your account.
After 30 days, the money will have been paid to the company or merchant and the bank relies on the co-operation of the company in order to refund your money, she says.
If you wait longer than 30 days, the bank will refer your complaint in writing to the company or shop in favour of whom you signed the debit order, but the bank will not become involved in disputes between you and the company, she says.
A debit order is dangerous because you are giving someone else permission to draw money from you account, and often to increase the amount at will.
Even if you try to cancel the debit order, a disreputable company can sidestep your instruction by simply changing the amount.
As a last resort you may have to close your account and open a new one.
HANDY TIPS
* Wherever you can, use a stop order rather than a debit order to make payments. With a stop order you authorise your bank to pay a fixed amount of money at regular intervals to a shop or organisation. You can change this at any time or stop it when you like;
* If the money you have to pay each month varies - for example if you have to pay a cellphone account or an electricity bill - consider using electronic payments rather than a debit order. You can pay accounts electronically via an automatic teller machine (ATM) or telephone. To do this, you simply transfer whatever amount you wish as frequently as you like. But you must first get your bank to set up account details of the organisation or person you intend paying; and
* Always check your monthly bank statement carefully.