Do you direct debit customers? Read this

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Do you direct debit customers? Read this

Authorities have been targeting direct debit practices with iiNet and Dodo receiving formal warnings.

Internet service providers iiNet and Dodo have copped formal warnings from the Australian Communications and Media Authority for violating customers' rights on direct debit arrangements.

A statement from ACMA said that iiNet and Dodo have both been warned for falling short of direct debit requirements written into the Telecommunications Consumer Protections Code.

"Many providers are now offering services to customers on a direct debit basis only. Those providers need to understand that it is critically important their direct debit practices comply with the TCP Code," said Chris Chapman, chairman of ACMA.

The investigation into iiNet found it violated its direct debit obligations in four different ways.

On 96 occasions in July last year, iiNet didn't provide customers the minimum 10 days to check their bill before direct debit occurred. The company also instigated credit management action on disputed bills – which it is not allowed to do under the TCP Code – in five cases between June and October 2013.

The ISP also didn't cancel direct debit arrangements within the maximum three days allowed under the TCP code on three occasions between June and September last year and didn't comply with a customer's direct debit authorisation in four cases that same winter.

The ACMA statement explained that service providers "must not take credit management action in relation to a disputed amount that is the subject of an unresolved complaint" when it's aware that the case hasn't been resolved "to the satisfaction of the consumer" and is still under investigation by the firm, the Ombudsman or another third party.

CRN contacted iiNet, but the company declined to comment.

In a separate enquiry, Dodo was found to have breached the code by not cancelling direct debit in a timely manner on seven occasions from December 2012 to September 2013 and not following customers' direct debit authorisation 12 times between June and September last year.

"M2 takes its compliance obligations seriously," a spokesperson for Dodo's parent firm M2 told CRN. "We process millions of transactions successfully each month and our processes have been proven to be compliant, however in the instances highlighted we did experience human error."

ACMA stated that both service providers have taken remedial action since the respective investigations.

The watchdog has been specifically looking into direct debit practices in the industry and the latest warnings resulted from those investigations. The TCP Code came into effect on September 2012 and ACMA has since handed down 152 formal warnings for violations.

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