Mystery debit orders leave bank client without answers

A Moneyweb reader recently discovered that two debit orders – totalling nearly R500 a month – had been going off her FNB account since February.

The charges were from companies she did not recognise – Legal Cover and Medic Now – deducting R260 and R225 respectively.

FNB provided her with the references for the two debit orders — SS-Legcov and SS-Medic.

The reader told Moneyweb that she had never had any business dealings with the two companies, nor had she authorised any debit orders linked to them.

When she contacted FNB’s fraud department, she was advised that the bank could not stop the debit orders and that she would need to cancel the transactions personally.

She was also told that the bank could not block future deductions because the reference numbers changed every month, making them difficult to trace.

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Medic Now and Legal Cover

FNB supplied contact numbers for both Medic Now and Legal Cover, which Moneyweb then contacted.

After several attempts, Moneyweb was able to reach Sameer Vasta, the legal compliance officer at Medic Now.

Medic Now is a private emergency response and evacuation service that provides ambulance transport to the nearest medical facility, a medical advice helpline as well as support in high-risk situations such as fires.

The service is marketed as an affordable alternative for individuals who do not have access to traditional medical aid, particularly those living in township areas where state ambulance services may be inadequate or unavailable.

Legal Cover is, according to its website, a “subscription-based protection plan” that provides legal services, including for divorces and traffic fines.

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22-step verification protocol

Vasta told Moneyweb that Medic Now does not conduct direct sales. Instead, the company relies on third-party marketing agencies that approach potential clients in busy public areas such as taxi ranks and shopping malls.

These agents use secure devices equipped with DebiCheck functionality, which allows prospective clients to authorise debit orders on the spot. The process, according to Vasta, involves a 22-step verification protocol.

He maintains that it is “technically impossible” for a debit order to be processed unless this process is completed in full and approved by the customer.

The Moneyweb reader maintains that she was never approached by any agents selling Medic Now or Legal Cover memberships.

She has since discovered the debit orders are linked to DebiCheck, but denies having received any notification from FNB prompting her to personally authorise them.

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What is DebiCheck? 

DebiCheck was introduced in 2017 to combat unauthorised debit orders. Unlike traditional EFT debit orders, DebiCheck requires customers to approve or reject debit order mandates before they are processed.

It was rolled out in phases by the Payments Association of South Africa (Pasa), under the guidance of the South African Reserve Bank.

Once approved, the mandate is stored and used for future deductions, ensuring the client has authorised the debit in advance.

Although not all companies currently use DebiCheck, banks recommend that customers make use of it wherever possible.

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‘Impulse purchases’

In response to the reader’s claims, Vasta said that while some clients later claim they did not consent to the deductions, such complaints are often linked to “impulse purchases”.

“It sounds good and at the end of the month, they realise they can’t afford it. They try to cancel it via the bank. And now they say they’re not aware of this.”

He emphasises that the references on the debit orders in question are indeed DebiCheck-authorised transactions – and that this is likely why clients find it difficult to cancel via their bank.

Vasta notes that Medic Now has a zero-tolerance approach to fraud.

If any marketing agent is found to have misrepresented the product or the authorisation process, they are dismissed immediately.

Vasta adds that while the debit order is initiated by Medic Now, it is only processed once the client has completed the necessary authorisation steps.

“It’s authorised by the client – not authorised by us. We cannot do debit orders without the necessary authorisation.”

A call to Legal Cover’s number (provided by FNB) went unanswered during office hours. When Moneyweb called the same number after hours, the recorded message listed business hours and directed clients to Vasta for urgent legal assistance.

Moneyweb later asked Vasta whether Medic Now is affiliated with Legal Cover – the second company deducting funds from the reader’s account.

He said there was no connection between the companies but confirmed that he is the legal compliance officer for both Medic Now and Legal Cover.

Vasta offered to personally assist in cancelling the reader’s debit orders.

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What banks say

Each of South Africa’s major banks offers advice and mechanisms to deal with questionable debit orders.

FNB

FNB notes that there are two types of debit order streams available to service providers: An EFT debit order and a DebiCheck debit order. The service provider chooses which stream to use.

Clients can dispute and reverse debit orders via online banking, the FNB app, or cellphone banking. Once reversed, a stop payment can be placed to block further deductions – although this is not always effective.

“Some service providers change the reference to circumvent the stop payment placed by the banks, allowing the debit order to be processed,” says Ravi Shunmugam, CEO of EFT at FNB. He adds that this practice contravenes debit order rules.

In cases of alleged fraud, FNB cannot report the fraud directly to the service provider on behalf of the client. The customer must submit the report themselves, including an affidavit, a copy of their ID, and a bank statement.

FNB may escalate complaints to the service provider’s sponsoring bank if needed.

Customers are notified via SMS whenever a new debit order is raised on their account for the first time. If they believe the debit order is unauthorised, they can dispute and reverse it by replying to the SMS or using FNB’s digital platforms.

FNB also offers functionality through its app, online banking, and cellphone banking that allows clients to view existing debit orders and dispute or stop those under R200. Debit orders exceeding R200 must be disputed via a branch or the call centre.

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Absa

Absa uses DebiCheck to ensure clients approve debit orders before they are processed.

“It is key to note that debit orders are agreements between customers and their service providers,” a spokesperson says.

Clients can dispute debit orders through the Absa app, in a branch, or via the contact centre. If necessary, the bank’s fraud team will assist with reporting the matter to the relevant authorities.

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Capitec

Capitec clients can view debit orders via the app or at a branch. According to Asha Patel, head of brand and communications, disputes can be logged digitally or through Capitec’s client care centre.

If fraud is suspected, an internal investigation is launched, and Capitec may contact the debit originator directly.

Patel says the payments industry is transitioning toward a mandate-driven model such as DebiCheck.

“However, some debit order streams rely on legacy processes where banks can request proof of the mandate from the initiating company. Although this introduces complexity, Capitec actively works within industry structures to reduce abuse and enhance client protection.”

If a particular company appears in multiple complaints, Capitec escalates the matter through formal industry channels, which may lead to the company’s suspension.

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Nedbank

Nedbank customers can dispute debit orders via the Nedbank Money app or online banking. If fraud is suspected, the matter is escalated to the bank’s fraud division for further investigation.

Although unauthorised debit orders remain a persistent concern, Nedbank says DebiCheck mandates have helped reduce the number of such cases.

The bank monitors transaction trends and flags suspicious originators, reporting them to Pasa and the Financial Sector Conduct Authority. Where abuse is confirmed, action may include suspension from the payment system.

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Standard Bank

Standard Bank offers three debit order types: traditional EFT debits, DebiCheck, and registered mandates. DebiCheck and registered mandates require customers to confirm mandates digitally before debits are processed, providing greater control.

For EFT debits that are deemed suspicious or unauthorised, Standard Bank recommends clients act quickly.

The bank can suspend debit orders and reverse previous deductions, provided they fall within a 365-day period.

“In rare cases of fraud, particularly where a client has been the victim of social engineering or their device such as a mobile phone has been compromised, it could result in what would on the face of it look like the actual customer having approved the debit instruction,” the lender notes.

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