Bank adjudicator warns about bogus deposits

Business Day, March 3 2003
Chantelle Benjamin
Legal Affairs Correspondent

Bank customers are being warned that a deposit slip might not be worth the paper it is written on, as many have discovered after falling victim to scams.

Bank Adjudicator Neville Melville said yesterday that he was concerned about the number of people who relied on deposit slips from banks as proof of payment for goods or services without checking to see if transactions had been successfully completed.

"The slip must be filled in accurately, clearly stating whether cash or cheques are involved," said Melville. "Where cheques are deposited, they must be legitimate and sufficient funds must be available in the drawer's account to facilitate these transfers."

He said that the bank customers wishing to be certain that they had been paid should request an electronic transfer, and where a cheque is the only means of payment, special clearance should be sought.

A bank is entitled to reverse a transaction if these conditions are not met.

However, this does not mean that the banks cannot also be held accountable. The adjudicator's office recently ruled in favour of a complainant who sold a computer to another person on the understanding that it would only be delivered once the cash had been paid into his account.

The computer was handed over after the seller received a duplicate deposit slip showing a cash deposit.

But it turned out that the computer had been paid for with a stolen cheque, and not cash. The deposit slip also differed from the original.

The bank concerned was held liable because Melville ruled that it could have, at minimal cost, introduced the practice of stamping deposit slips "no cash", thereby reducing the likelihood of fraud from the very beginning.