Tuesday, March 04, 2003

On the air... direct debit via Internet

Local news station RTV Noord Holland had a customer complaint with respect to an unjustified direct debit. Mw Dobbe found that an unknown company debited her account. Instead of phoning to her bank she phoned the company (Volat BV Kadopost... for 0,45 euro per minute....). They promised a payment reversal but did not live up to their promise.

RTV Noord Holland phoned the company to enquire. The company explained that the payment was made as a result of an Internet-direct debit and that the Postbank had made an error. Also on the phone line was Gijs Boudewijn of the Dutch Association of Banks. He explained that no such thing as an Internet direct debit existed (yet), because it turns out that such systems may be error prone. RTV Noord Holland made Volat promise to reverse the payment, which they did.

Later on another customer complained about a similar debit off their account. The direct debit was, upon request, reversed immediately. So, this was an example were the direct debit procedure worked fine. Still RTV and the customer felt that banks should not have designed the direct debit system that it requires consumers to take action if anything goes wrong. Mr Boudewijn continued to explain that with almost 1 billion payments via the direct debit procedure, the costs were as low as possible. But banks will be seeking for improvements and a solution for direct debits over the Internet.

See also my proposal to solve this: 3D-liability shift for acquiring banks. And maybe it is an idea to charge companies that make errors in these procedures, an administrative fine of 25 euro for the payment reversals/chargebacks. It helped for credit-cards, should also work for other products.