With strict authorization processes and security protocols being the major characteristics of GIRO, it didn’t take long for businesses to place their trust in this interbank payment system after its introduction. However, many assumed this safety to also cover up for human errors, which wasn’t quite realistic.
While the recurring transactions are automatically conducted if a GIRO arrangement has been set up successfully, the termination is what requires a business to inform the bank directly. The human error of forgetting to terminate an arrangement can tangle business owners in the tedious process of recovering funds and dodging conflict. However, if this unfortunate situation presents itself, here’s what can be done:
Tips for mitigation:
- Contacting the recipient: If a GIRO transfer is unintentionally made to a past service provider, a business would likely have the service provider’s contact details. An official email should be sent because having a written record of communication is important. The email should inform the account owner about the unintended transfer and politely request a refund. It’s recommended that an expected timeline for refunds should be suggested to ensure the company’s budget doesn’t suffer. It’s also advisable to contact the service provider directly via phone after the email is sent to expedite the process. Direct communication with the recipient is often the fastest way to resolve this problem.
- Informing the bank: Even if the service provider agrees to refund, the bank shouldn’t be kept out of the loop. As soon as an unintended transfer is detected, the business should instruct the bank to terminate the active arrangements with the vendor. Some banks may even provide notification of active arrangements while closely monitoring account activity to ensure that such issues don’t occur again. Banks can also use this information to keep a record of the issue, which may benefit if a dispute arises in the future. Further, the banks can act as facilitators of the refund request by officially notifying the recipient of the unintended payment. They may also help expedite the refunding process by providing instructions to the recipient on how to send the funds back.
- Seeking legal advice if needed: Although unlikely, a vendor may not agree to refund or not respond to emails or calls for a long time. In either case, the business should seek help from law enforcement to solve the issue. Transaction records, service agreements, and the date of termination of service can be used as evidence for the officers to initiate an action actively. Another situation could be the one where a vendor may agree to refund and respond to calls and emails yet delay the process. Even though this step may burn bridges between the business and its vendor, legal help should be sought in such situations as well.
Such GIRO-related mishaps are tedious to manage, but they’re also preventable if businesses are more cautious.
Tips for prevention:
- Periodically reviewing GIRO arrangements: Business owners should set aside time every month to review their financials, including the list of active GIRO arrangements. Since business owners are likely to know about all active agreements with vendors, they’d be quick to spot any arrangement related to a past service provider. Some companies that have hired many service providers could consider designating a person to do this task, given they are always aware of company-wide agreements with vendors.
- Maintaining clear communication with service providers: All official communication should be made through channels accessible by more than one company official. It would help if these threads included a timeline of events, like the acknowledgement of when an agreement starts or terminates. These communication trails will help legal officials and banks strengthen the refund request if they eventually end up getting involved.
GIRO ushered convenience for businesses that wanted to streamline voluminous recurring transactions. However, errors like failing to close existing arrangements can trigger unintended transactions. Businesses should prioritize maintaining centralized communication channels to support their refund requests. It’s also important to inform the bank for additional record keeping and terminating the existing arrangements. In the case of disputes or disagreements with the service providers, legal advisors should be consulted.
Whether a business receives or sends funds unintentionally, it should cooperate with the other party involved. Cooperation will lead to quicker resolution and preserve the relationship between the vendor and client.
