How to reduce the risk of Direct Debit fraud

What is Direct Debit fraud?

Direct Debit fraud occurs when a debit is taken from your account without the proper authority from you set out in a valid Direct Debit request.

Sometimes this can occur when BSB and account numbers published online or in a public document have been used in a Direct Debit form to debit accounts.

There are some steps you can follow to help reduce the risk or impact of this happening to your business.

Check your accounts regularly

We recommend you check your accounts regularly (preferably daily) for any suspicious or unauthorised transactions. Online banking is the quickest and easiest way to check your accounts, rather than waiting for account statements to arrive. Promptly report any suspicious debits to NAB.

Block suspicious Direct Debits

If needed, you can ask us to block future Direct Debits from specific third parties. If you need to remove a block, please contact us.

Please note:

• We can only place blocks where the relevant Direct Debit User ID has been identified.
• We can't proactively block all future Direct Debits to an account.

Avoid making account details public

One way to reduce the risk of Direct Debit fraud is to keep your BSB and account number confidential.

If your business needs to publish account details on websites, invoices or other public documents, consider using a separate inward account to receive payments.

An inward account structure is designed to reduce the risk of fraudulent activity by separating incoming funds from day-to-day operating accounts. It does not eliminate the risk of Direct Debit fraud.

Set up an inward account

Use a dedicated account to receive incoming payments and only share or publish these account details when required.

Consider maintaining low balances in publicly disclosed accounts and transferring funds to operating accounts regularly.

To get the most benefit from an inward account:

• Don’t make outward payments from this account.
• Request all fees including any return items be posted to an operating account (see below).
• Keep the balance low by regularly transferring funds to your operating account using NAB Connect or Internet Banking.
• Consider establishing an automatic balance transfer. You can ask your banker about a suitable product.

Set up an operating account

This account should be for normal business activity and is used as follows:

• Keep account details confidential.
• Make all outward payments from this account.
• Nominate this account as your fee account.

This suggested practise is intended to reduce the potential risk of fraud and improve account segregation practices, but does not eliminate the risk of Direct Debit fraud or unauthorised debit requests. Customers should continue to monitor accounts regularly and promptly report suspicious activity. For further advice, please speak to your banker.

Don’t recognise a Direct Debit on your account?

When checking your accounts if there is a Direct Debit you don’t recognise, notify us immediately.

This is how you can contact us: 

• submit a transaction dispute online;
• contact us on 13 10 12; or
• contact your banker.

Dispute process for unrecognised Direct Debits

You can submit a transaction dispute using our online form.

Once you’ve lodged your dispute, we’ll work with the bank where the transaction was initiated to request evidence that they have the proper authority to debit your account.

They have five business days to provide us with an appropriate response, we’ll then advise you of the outcome. 

Our transaction dispute page explains the process in more detail and provides information on what to do if you’re unhappy with the outcome of the dispute.

Rules and regulations governing Direct Debit

Direct debits are regulated by the Bulk Electronic Clearing System (BECS) Procedures and Regulations. These rules place primary liability on the bank where the transaction was initiated (Initiating Bank) to demonstrate proper authority to debit your account.

Under the BECS guidelines direct debits made without proper authority from you are usually covered by the Initiating Bank. For further advice please speak to your banker.