Why your bank MUST reimburse you if a direct debit is set up without your authorization – your fraud rights explained
Direct debits can be a minefield – and unfortunately, they often go wrong. Here are your rights
Direct debits are great for convenience, but are painful when they go wrong.
People can be affected by fraud – and some of them can take your money even after you thought you canceled.
Here is my how-to guide and how to troubleshoot.
All banks and mortgage companies are bound by the direct debit guarantee. These rules act as protection for consumers:
In the event of a change in the amount to be paid or the date of payment, the person who receives the payment – the ordering party – must inform the customer in advance.
In the event of an error on the part of the principal, the customer is guaranteed a full and immediate refund of the amount paid.
The customer can cancel a direct debit at any time by writing to his bank or to his mortgage company.
Banks and building societies often give incorrect information about direct debits.
The Financial Ombudsman Service says the most common things consumers are wrongly told are:
“We do not operate the automatic debit guarantee. It does not make sense. ALL banks and mortgage lenders must follow it.
“You will need to contact the original company for a refund. »No – you contact your bank or your building society and they have an obligation to act.
“We need one month’s notice to cancel a direct debit.” Not true. Under warranty, you can cancel at any time.
“The guarantee does not apply because you have not suffered any loss. Total waste.
Get a better bank account
If you want to cancel a direct debit, you must do so in writing, by post or by e-mail. Following this, your bank or mortgage company has the obligation to cancel the direct debit immediately.
If payments are subsequently sent after your cancellation, you will be entitled to a full refund.
Fraudulent direct debits
Unfortunately, these are common as direct debits can now be set up electronically without the need for a signature.
The good news is that if a fraudulent direct debit is set up in your name, you will be entitled to receive a refund from your bank or mortgage company for any payments that have been withdrawn from your account.