Recycling is all the rage, but consumers generally aren’t enthused by the idea of their old bank account or cellphone number being recycled — that is, being passed on to someone else.
If there’s no activity on your cellphone SIM for three months — four in Vodacom's case — your number will be confiscated by the network and allocated to another subscriber.
The same happens if you give up your number.
The practice causes problems for both parties — the new owner of a number often has to deal with a string of SMS debt payment demands, for example.
The networks justify this practice by saying those numbers are a scarce national resource, hence the Independent Communications Authority of South Africa (Icasa) requiring network operators to manage those assigned to them “efficiently”.
Most South African banks do not recycle your account number when you close your account. But one does — Standard Bank.
It does so three years after you’ve moved on, and the Payments Association of South Africa’s (Pasa) rules allow this.
Louis Weinberg shared with me how his wife lost out because of this practice.
She owns a small business, and until 2014, her business account was with Standard Bank.
In July that year she moved her account to Nedbank.
She informed Sars of her new account number and one tax refund was deposited into that Nedbank account, so she assumed all was well.
But in 2020 things went wrong with a much larger amount — R477,000, the sum of several years’ refunds after a protracted dispute.
For some reason that amount was deposited into the business owner’s old Standard Bank account.
Unbeknown to her, that account number had been allocated to another Standard Bank client in 2017.
Had that not been the case, Sars would have been able to retrieve the money in full — albeit after five to 10 business days — and transfer it into the correct account.
As it was, having been alerted to the mistake, Standard Bank recovered the bulk of that erroneous deposit — R448,000 — and returned it to Sars, which then paid it into her Nedbank account.
But that left her about R28,800 short, money the new owner of her old account number chose to spend rather than refund.
Weinberg demanded that Standard Bank reimburse his wife that shortfall, saying had her old account number not been recycled, she would have received her full tax refund.
When the bank refused, he lodged a complaint with the ombudsman for banking services, which sided with the bank.
Head of OBS adjudications Nerosha Maseti said there were no grounds to hold the bank liable for Sars’ failure to make a payment into the correct account.
The bank had not transgressed Pasa rules by reallocating the account number just more than three years after it was closed and therefore the claim should be directed instead to Sars for failing to adhere to the payment instruction, she said.
“[Weinberg] was also entitled to claim the funds from the beneficiary account holder who was unjustifiably enriched by the transfer from Sars.”
But that’s not practical, given the cost of such legal action.
This is not the first such case I’ve come across.
In 2016 Gavin Thomson’s mother did an EFT of R17,000 into what she thought was his current Standard Bank account, not realising he had closed it in 2010.
In 2013 the bank allocated his old number to another customer, who promptly spent the R17,000 “windfall”.
But in that case, the bank offered to refund him half the money.
I asked FNB, Absa, Nedbank and Capitec whether they recycle bank account numbers. All said they do not.
“When new account numbers are generated for customers, we have comprehensive checks and balances to ensure account numbers are not duplicated,” Absa said.
“Account numbers are linked to the profile of the client for life,” was Capitec’s response.
We inform clients about the account number potentially being recycled in the terms and conditions upon opening and activation of their account
— Standard Bank
Similarly, FNB said customers were able to reactivate their closed accounts should they want to.
Given bank account number recycling is not the norm in South Africa, I asked Standard Bank how it discloses this practice to customers, particularly when they close their accounts. It is most definitely in their interests to know.
“We inform clients about the account number potentially being recycled in the terms and conditions upon opening and activation of their account,” I was told. Yes, those pages and pages of contract terms few people read when they sign up, much less years later.
Telling them, directly, when they close their accounts would be appropriate, in my view.
Standard Bank is not alone in recycling bank account numbers. Many banks around the world do, arguing that there are not enough new numbers to go around and it would be too expensive to add extra digits.
In a Scottish case reported in The Guardian, a mother made several payments into her 33-year-old son’s Clydesdale Bank account, not realising it had become someone else’s account number several years previously.
The new owner refused to give back the money, and none of the stakeholders had the authority to compel him to do so.
And in the past, when cheques were still a thing, owners of recycled accounts lost out when former bank customers saved their old cheques and used them later to pull money from their old accounts.
Money which was not theirs to take, of course.
In California, banks are legally allowed to recycle bank account numbers, but they have to wait at least three years to do so, as is the legal position in South Africa.
So here’s the advice: if you closed your Standard Bank account more than three years ago, make very sure any person or company owing you money or wanting to gift you knows your new bank account details.
And if you’re paying into a Standard Bank account, either adding a new beneficiary or making a one-off payment, for R2 you can verify that the account holder matches the name of your intended recipient. Tap on the “verify” tab to do so.
Better safe than sorry.
• GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.
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