Direct debit security concerns

CROSS-border direct debits are not secure in the way they are being set up by the banks, the European consumers’ organisation, BEUC, has warned.

They have been backed up by the European Parliament’s Economic Affairs committee that said it too was concerned about the risks to this element of the Single European Payments Area (SEPA).

The scheme to eliminate all banking borders within the eurozone came into effect last year but take-up particularly of the direct debit elements has been slow.

Now BEUC director general Monique Goyens warns that SEPA risks being a complete failure unless core issues are resolved, especially the security of the direct debit scheme.

She said that currently this constitutes a call to fraudsters to help themselves to other people’s money.

“Nothing requires banks to check the reliability of the issuer of the direct debit payment, neither the validity of the mandate, meaning a fraudster in countries as distant as Finland or Romania could, with my bank details and my name and address, instruct my bank to take money from my account without my consent.

“This is a serious downgrading of basic security already existing in many national direct debit schemes,” she said.

National schemes normally require the person setting up a direct debit to prove their identity and address is the same as that of the bank account holder.

Ms Goyens said they had asked the European Payments Council, the banking body that runs SEPA, to deal with this problem, but they have been ignored so far.

She welcomed the European Parliament’s concern and the fact that the European Central Bank has said it would do whatever it could to take consumers fears into account.