Businesses and individuals should be vigilant when relying on deposit slips as proof of payment for goods or services, Neville Melville, the Banking Adjudicator, has warned.
Melville says a deposit slip does not necessarily prove that a transaction has been completed successfully.
For a transaction to take place:
- The deposit slip must be filled in accurately, clearly stating whether cash or cheques are involved;
- In the case of cheque deposits, the cheques must be legitimate and there must be sufficient funds in the drawer's account.
Even though a recipient's account statement may initially reflect that a deposit has been made, the recipient's bank is entitled to reverse the transaction if the above conditions have not been met.
To avoid the problems associated with deposits, Melville advises that, where possible, you should request payment by electronic transfer.
Where cheques are the only available means of payment, the recipient (payee) should seek special clearance from his or her bank before providing any goods or services.
One bank is prepared to fax the top (original) copy of a deposit slip to its clients, in order to give them the added assurance that dishonest depositors have not tampered with the deposit slip.
Normally, a bank gives the depositor the bottom (duplicate) copy of the slip, which he or she sends to the recipient as proof of payment.
Melville says the onus to prevent fraudulent deposits does not rest with bank clients alone.
In line with the Code of Banking Practice, every bank must assume full responsibility for communicating the dangers of deposit slips to its customers and personnel, he says.
The Adjudicator's Office recently ruled in favour of a complainant who said he had been mislead by his bank when he sold a computer on the understanding that the machine would only be delivered once the buyer had made a cash deposit into the seller's bank account.
The seller handed over the computer after the buyer presented him with the bottom copy of the deposit slip, which reflected a cash deposit.
However, it turned out that the deposit had been made using a stolen cheque. The duplicate copy of the deposit slip differed from the original.
In finding the bank liable for the cost of the computer, Melville said the bank could have introduced, at minimal cost, the practice of stamping no cash across deposit slips when a cheque was presented, thereby reducing the likelihood of fraud at the teller-point.
Stamping no cash on the slip would alert the recipient that the money will not be placed in the recipient's account until the bank has cleared the cheque.
Melville says that one way for clients to be alerted to the potential for fraudulent deposits is for banks to print warnings about the dangers of bogus transactions on deposit slips.
With case law dealing with the falsification of deposit slips going as far back as 1953, there is no reason why bank staff should not be fully aware of the dangers of failing to check deposit slips properly, Melville says.
Likewise, consumers should remain observant at all times, taking care to establish the creditworthiness of the people they deal with.
- How to contact Neville Melville, the Banking Adjudicator:
Telephone: (011) 838 0035
Fax: (011) 838 0043
Post: PO Box 5728, Johannesburg, 2000