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BECS Direct Debit Customer protection & claims

Chris Hooper
Written by

Last editedApr 20233 min read

Within BECS Direct Debit, there are customer protections in place allowing customers to cancel a Direct Debit request, and to refund customers for payments taken incorrectly.

Cancelling a Direct Debit Request

Customers can cancel a Direct Debit request (DDR) by contacting the merchant or by contacting their bank. If the customer’s bank receives a request for a DDR cancellation, they must stop taking further payments from the customer’s account.

The bank can’t charge any overdraft fees to cover a cancelled Direct Debit, and if a customer is wrongly charged after a cancelled Direct Debit, the bank must refund them.

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Asking for a refund

Customers can request a refund for Direct Debit payments taken from their account under certain circumstances. Their bank will submit a claim on their behalf.

A ‘Valid Claim’ is sent from the customer’s bank to the Debit User’s bank when:

  • The customer account has been debited with amounts not authorised by a Direct Debit request

  • The customer account has been debited with amounts not in accordance with the Direct Debit request

  • The payment was not made in accordance with the Direct Debit request

A Valid Claim can also include any claim where:

  • The Debit User’s bank accepts liability, regardless of the circumstances

  • Where a court or relevant industry body makes a decision or an order that the Debit User’s bank make a refund payment

  • The Debit User’s bank accepts that the Direct Debit was made in error

Once a customer has asked for a refund, the customer’s bank must establish whether it is a Valid Claim. The customer will then complete a ‘Direct Debit Customer Claim’ document, including the following:

  • Customer contact details

  • Identification of the Debit User

  • Identification of the disputed debit transaction along with reference details

  • Why the customer is disputing the Debit User’s authority to debit their account

  • Date and customer signature (if in writing)

The document will also advise the customer that the claim may be disputed. The customer’s bank must submit the claim to the Debit User’s bank by the next business day, who will forward the claim to the Debit User and require it to provide evidence of the authority to debit the customer’s account.

The Debit User’s bank must inform the customer’s bank whether the claim is accepted or refused according to the timelines below:

  • For claims made within 12 months of the date of the disputed Debit transaction, the Debit User’s bank must respond within 5 business days of receipt.

  • For all other claims, the Debit User’s bank must respond within one month of receipt.

The Customer’s bank must then notify the Customer of the response by the next business day following the period allowed for the Debit User’s bank to respond to the claim. If the Debit User’s bank accepts the claim or fails to respond to the claim, the Customer’s bank may do one of the following:

  • Refund the amount of the claim to the Customer

  • Draw on the Debit User’s bank claims account.

Disputing a customer claim

The Debit User’s bank may refuse the claim within the claim period and produce evidence of the Debit User’s authority to debit the customer’s account. If the customer wants to contest the refusal, and their bank determines the claim is still appropriate, then the customer’s bank must give written notice that the rejection of the claim is disputed to the Debit User’s bank.

The customer’s bank and the Debit User’s bank should try to resolve the dispute between them. But if the dispute isn’t resolved within 30 days from the date the Debit User’s bank received the claim, it may be referred to the BECS management committee.

The risk of facing a Customer Claim can be minimised by:

  • Giving proper billing advice notices. If customers are provided with billing advice notices in advance they will be able to raise any issues or cancel the payment before it is made.

  • Providing good customer service. Clear contact information and good, easy to reach customer service will encourage customers to come to you with complaints before seeking a refund from their bank.

  • Promptly processing cancellation requests. DDR cancellation requests should be processed immediately to avoid attempting payments on a cancelled authorisation.

  • Following the Direct Debit scheme rules. Make sure you and your provider precisely follow the Direct Debit scheme rules - including any updates.

Managing refund requests with GoCardless

GoCardless helps you manage refund requests. If one of your customers makes a request, we’ll notify you immediately. We’ll work with you and your customer to understand why, and retake the payment if appropriate.

GoCardless' processes are designed to minimise the risk of a refund request and to make sure you always follow the Direct Debit scheme rules.

These rules include:

  • Payment pages: These should be clear and compliant.

  • Advanced notices: GoCardless automatically notifies your customers via email in advance of a payment.

To find out more, please see the GoCardless website.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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