Direct Debit - should the merchant always be right?


#1

I called BNZ to cancel a Direct Debit payment today - nothing sinister, I’ve just reached the end of an agreement with a supplier, I know mistakes can be made and I can’t really afford for money to go out of my account in error. The call centre guy was very helpful and said he could delete it BUT if the merchant calls for the payment they will give it, based on the authority that I have already given to the merchant to do so. This seems incredibly biased to the merchant - what kind of protection is there for me as the customer if the merchant is not delivering the service I signed up for or if they are acting fraudulently in continuing to call for payment they are not entitled to or if they do not have systems in place to make sure they cancel things effectively at their end? So I asked the call centre guy if this was really the case - I said could this actually mean that I could end up paying a merchant for the rest of my life, if they continued to call for the money because of a historic agreement, even though circumstances may have changed? There was silence. Even if, hypothetically, the merchant was calling for the payment when I had expressly asked them not to? BNZ would still make the payment? “Well, in that instance, we would help you to close down your bank account.” Seriously? Is this for real? I would be really interested to see what others think of this because it sounds a bit crazy to me :slight_smile:


#2

I have heard this theme before - the direct debit system does favor the merchant. I’d suggest just cancel it and hope for the best.

I’m with you on this one.


#3

Here is an article by the consumer.org.nz
https://www.consumer.org.nz/articles/how-to-cancel-a-direct-debit
"You’re entitled to cancel the direct debit directly with the bank at any time – as long it’s from a bank account"

There is certainly the laws of contract that would apply.
A contract that allowed continued payment without any service would be ruled invalid by a court.

Regarding fraud that’s a police matter.
You can just close your bank account.

The consumer article mentions the code of banking practice. This is all good in theory but in reality the banks won’t follow your instructions if its not in their best interests to do so. Also the code of banking practice is not legally binding on the bank.

If you do have a contract with the company read it carefully and if it allows for payment to be made to them without them providing any service, report them to the commerce commission or to the department of internal affairs.

If there aren’t specific laws as to how the bank should comply, then there may be case law with an issue similar to yours. If you have the time and interest, there will be some great books on banking law in the University law library, along with books on contract law.

I don’t have issues with direct debits but I do know that your issue will not be unique.
And yes it is crazy. Its also useful to know that the bank also works in the capacity of an agent. So the bank are just following an authorised instruction to allow then to pass your money on to a third party.

Perhaps BNZ might like to make a comment on this board as to its policy on an issue such as yours.


#4

Witchy, not really the right answer there. Once your Direct Debit is cancelled, this will stop the DD coming out of your account. However if the Initiator is what is called a Preferred Initiator this could start transacting again after 9 months under the Terms and Conditions. Biggest problem is where customers take out Gym memberships for a year or 2 years and cancel after 2 months, then the Gym will make the request to debit and it then becomes an issue between the initiator and the customer.

If you are talking about an ongoing payment from a Credit Card and you are calling this a Direct Debit (some of us have Sky Bill or Spark coming from Credit Card) then there is no cancelation service from the BNZ here, it is up to the Merchant to stop sending through. If there is a dispute then you could look to have a chargeback between your card and the Merchant.

I hope this has helped.