From: Ronald Raygun 
Subject: Re: The Direct Debit Guarantee (DDG)
Newsgroups: uk.finance uk.legal
Date: Tue, 12 Jun 2007 22:48:09 GMT

Fergus O'Rourke wrote:

> "Ronald Raygun"  wrote in message
> news:WUvbi.3867$p8.2266@text.news.blueyonder.co.uk...
> [snip]
>>.  Can you point to something specific in
>> the current wording which can be unequivocally interpreted as meaning
>> that if you tell the bank that an error has been made, then they don't
>> need to believe you, and so can avoid their obligation to give a refund?
>>
>> If you can, then that would indeed amount to a dilution, but I can't
>> see it myself.  It is implicit in the word "immediate" that there can be
>> no thorough and hence time consuming investigation of your claim *before*
>> the refund is given, and it would appear to follow that they must take
>> your word.
> 
> Part of what I am saying is that the promise of an "immediate" refund
> cannot be reconciled with the condition "if an error has been made".

I think it can be.

Part of what I'm saying is that I don't think it makes sense not to impose
that, or a broadly equivalent, condition.  Where no error has been made,
there can be no justification for a refund, immediate or otherwise, at
least not from the bank.

The crux may be that you believe that customers who, instead of a
"payment" complaint, have a "consumer" complaint (e.g. if they (say
they) were given faulty or shoddy goods, or have decided they don't
really like the colour, etc), can use the DDG to bypass the proper
channels for returning the goods and obtaining a refund under their
rights under -inter alia- the Sale of Goods Act.  That is not what
the DDG is there for.  Its purpose is merely to instil confidence in
the consumer public that DD is a safe form of payment, and that it's
OK to -in effect- give shops carte blanche to help themselves to
funds in their bank accounts, because they will really only help
themselves to what they are genuinely owed.

The DDG is not to be seen as the debit card equivalent of making a
credit provider jointly liable with the supplier where there are
"consumer" issues.  The Consumer Credit Act does not apply here
because no credit is being given.

> As I understand you, you are saying that the word "immediate" determines
> the interpretation of the condition. That's an interesting view, but I
> would question that a bank official, in doubt - for whatever reason - as
> to whether an error has really been made, will be persuaded by that point
> alone.

Not quite.  I'm not saying the word "immediate" qualifies the condition,
it merely implies that if there is any delay in giving the refund, this
would violate the immediacy requirement, and therefore any attempt by the
bank to verify whether the condition has been satisfied can necessarily
only be most cursory.  That means the customer should not be required to
provide evidence at this initial stage, but could be quizzed about why
they think they deserve a refund.  If they say it's because they don't
like the colour of the handbag they bought, then they should be told
to naff off, but if they say they were accidentally charged £210 for
it instead of £21, because the cashier's finger slipped, and the customer
didn't notice at the time, then clearly the refund should be given.

I would reiterate that it should be irrelevant whether the bank official
is in doubt, he does not need to be convinced that an error has actually
been made, merely that the customer isn't (by genuine mistake) claiming
for the wrong reason.  If a customer is wise to this and deliberately
lies, then unless the bank official has good reason to think he's lying,
such as if he's done it before several times, he has little choice but
to approve the refund.

> As far as I can see, there is no regulatory or FOS guidance to which the
> official could be referred. I do note - from a post on uk.legal.moderated
> IIRC - that the rules of the scheme may be useful, but I have no access to
> them any more and they seem to be unavailable to bank customers. This
> seems rather unsatisfactory.

Agreed.