Question:
Why is it so easy for a bank to give your money away via debit orders that you have not sanctioned?

In the past it has happened repeatedly at my business where staff in our Johannesburg office put through a debit order for Vodacom onto our account. Now this has happened again.

Surely the bank receiving this debit order information must check if the debtor knows about this? Shouldn't they, at the very least, demand the company giving the debit order have a signed letter from the entity ordering payment?

Answer:
When dealing with large suppliers like Vodacom the bank receives the debit order on what they call ACB mag tape. The mag tape system works as follows:

A company or a bureau appointed by a company makes up a computer tape of debits to be deducted from or credits to be added to individual bank accounts. The tape is sent to the Automated Clearing Bureau (ACB). Companies are vetted by the ACB which represents the banks before they are allowed to use the system. Once authorised by the bank and after tapes have been submitted, the ACB checks the tape information against its own information to ensure that account numbers provided are valid and still open. Any problems are resolved by the bank of the company which is paying or receiving the money. The bank does not verify the information that comes through on the mag tape manually.

The processes and protocols followed by Vodacom for verifying the banking details of customers are very similar to those used by Banks and are implemented to ensure that the banking details provided by the individual is that of the owner.

Debit orders for payment of cellular accounts that are to be debited to a business account can only be activated if such request is in writing and on a letter head of the company.

Vodacom claims to make every effort to ensure that data captured throughout the customer acquisition process is accurate. However, errors do occur. A number of validation, verification and authentication processes are initiated at point of sale and post-activation to increase such accuracy.

Customers, especially the owners of smaller and medium sized businesses, are urged to check their bank statements on a regular basis to ensure that no ‘unauthorised’ debit orders are processed through their accounts.

Customers who believe there has been ‘unauthorised’ processing of debit orders against their bank accounts are urged to call Vodacom’s Customer Care or Accounts departments on 082 111 (free from a Vodacom cell phone) or 082 1946.

Companies often leave their letterheads lying next to the fax machine or make them easily accessible to everyone. They should be closely watched as they can be abused. This is what might have happened in your case.