Debit orders can easily become a monster if you do not take great care about who gets authority to raid your bank account.
The monster broke cover this week when no less an authority than Kevin Daly, the general manager of the Banking Council, said that he would not authorise a debit order from his own account "unless he was absolutely confident of the credentials of the service provider".
When you sign a debit order for money to be withdrawn from your account, you should be aware that you are giving some one else carte blanche to dip into your account.
Debit orders are used by many of us to pay a range of accounts, from telephone bills to unit trust investments.
A Personal Finance survey this week showed that total confusion reigns in the banks about your rights to let other people access your money through a debit order.
Debit order problems include:
* Confusion about whether you or your bank is responsible if money is drawn illegally from your account;
* Differing views on how a debit order may be cancelled. Some banks say you must cancel an order with a service provider. Others say they will only cancel a debit order on your instructions for a brief period, after which it comes back into force. And then the back payment can also be claimed from you;
* The lack of a verification system by the banks to ensure that you actually did authorise the organisation to draw money from your account.
* Not all banks will reimburse you for money deducted from your account without your permission. Some expect you to claim the money back from the company;
* If a company is dishonest it can sidestep your instructions to your bank to cancel a debit order by simply altering the amount. Many bank computers then read it as a new instruction.
* Debit orders are often used in negative response marketing, where if you do not actively say no you will be debited for a product. Standard Bank recently did this to its customers, in cahoots with the life assurer, Charter Life;
Companies prefer the convenience of a debit order, because they can get all the money owing to them that month at a push of a button.
Shady companies can and do abuse the debit order system by submitting a lot of so-called unpaid debits to a bank for payment. This was recently done fraudulently by a Gauteng burglar alarm company.
In another scheme, 29 000 bank account holders had R22,50 deducted from their accounts for a bogus funeral policy without their authorisation or knowledge.
Ann Bramhill, spokeswoman for First National Bank, says the bank is aware that the debit order system is open to abuse and needs an overhaul.
She says the bank recognises that there are criminals out there and realises that it has become necessary to "plug the holes".
Adriaan du Toit, group general manager of operations at Absa Bank, says ABSA checks out companies which benefit from debit orders.
They must sign sureties so the bank can reclaim disputed money.
WHAT YOU SHOULD DO TO PROTECT YOURSELF
* If the amount you pay every month is the same, choose a stop order. It is the safer option.
* Only use a debit order if you are satisfied that the company you are paying is above board. Read the debit order instruction carefully before you sign it. Some instructions include clauses which state that you are presumed to have signed authorisation for any money that the company should withdraw from your account.
* Keep copies of all documents that you sign, including debit order instructions.
* Check your monthly bank statements carefully and query withdrawals if they look suspect.
* Beware of negative response marketing in which your account is debited for products such as credit life assurance without your authorisation.
* Should you have a dispute with a company over payment and you suspect that the company will not comply with your instruction not to draw money from your account, close your bank account and open a new one. This is the only way to ensure that your money is safe from the clutches of others.