- Bacs, Bureau Service, Direct Debit, Paperless Direct Debit (PDD), Security, Training
- 08, APR 2016
Collecting Direct Debits? Concerned about Fraud? Do you KYC?
Direct debit fraud….really? Yes, it is possible but it is a much rarer thing compared to credit card fraud. For those who collect direct debits (service users), reducing risk in collections is paramount.
Know Your Customer (KYC) checks can aid this and is part of a broader set of banking regulation that is used in verifying identity of clients and reducing risk. Within the Direct Debit scheme, KYC is simplified to mean the verification of an individual payer – that they are who they say they are and live where they say they live – prior to making a direct debit collection.
The checks are recommended for AUDDIS, where a paper Direct Debit Instruction (DDI) (mandate) is submitted electronically to the Bank of the payer, and are mandatory for Papperless direct debits, where there is no paper DDI i.e. sign-up is online or over the phone.
Paperless service users are required to:-
- Adhere to direct debit scheme rules on paperless sign-ups
- Check each paperless sign-up (whether over the phone or electronic)
- Check direct debit details at the point of capture
- Not re-key payer’s details
- Confirm the paperless direct debit set-up to the payer/customer within 3 days of sign-up.*
*An alternative timeframe can be used when combining ‘Confirmation’ of a paperless direct debit set-up and ‘Advance Notice‘ of a collection, to the payer
KYC processes needn’t be scary!
Your KYC process should not discourage direct debit sign up – it should support it! Some customers may have concerns on providing their bank details and other personal information electronically or over the phone and as such, prefer a paper DDI. Service users should maintain this as an option.
Payer’s concerns can include:-
- The security of their information
- The possibility of mistakes
- The possibility of fraud
Service users who stay up-to-date with the latest direct debit scheme rules and are aware of the mandatory requirements for such checks, can handle concerns more confidently. This helps to promote paperless direct debit sign-up as a method that has many benefits for the payer and the service user. See Clear Direct Debit Scheme Training to learn more on how we help organisations in ‘easy’ understanding of the scheme rules and operating an effecient, compliant direct debit process.
Bacs have provided list of recommended verification measures, which include:-
- Address verification against Royal Mail Postcode Address File (PAF)
- Telephone number verification
- National change of address processing
- Gone away suppression files
- Electoral roll processing
- Sight of documentation or card (a bill, statement, debit/credit card, cheque book)
For more suggestions: www.bacs.co.uk/documentlibrary (log-in required)
See more on Clear Direct Debits Bureau Service
See more on Clear Direct Debits Scheme Training
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