An Indemnity Claim is a request made by a Direct Debit payer to claim back funds they believe have been incorrectly debited from their bank account. The right to raise an Indemnity Claim is a fundamental part of the Direct Debit Guarantee Scheme operated by all UK Direct Debit providers. They are raised by the payer to their bank, and will be deducted from your funds in 14 days from the date of claim unless the claim is successfully challenged, or the payer withdraws their claim.

Thankfully such claims are rare, and on average will happen to small fractions of 1% of your Direct Debit payers over the course of their lifetime with you.

Yes you can, although it can prove difficult to do so. The banks pay no interest to whether a member is still within a contracted period, nor whether they have attended your gym for the paid-period for example. Claims can be challenged only on technical grounds, we outline these below.

Where you believe that an Indemnity Claim is incorrect, we encourage you to communicate directly with the payer to attempt to resolve the claim. Here you can provide any supporting evidence, for example, gym or class attendence dates and times, or where a payer states they asked you to cancel their membership, ask for proof. Many Indemnity Claims are unfortunately incorrect and could even be considered fraudulent. Try to appeal to the payer to pay back the funds, and perhaps consider a "notice before action" in which you may state that you intend to lodge a Small Court Claim unless the claimed funds are repaid.

London & Zurich can challenge Indemnity claims raised by your customers as long as we receive the supporting proof within 8 working days of the indemnity claim email being issued to yourselves.

The bank only allows Direct Debit Providers like L&Z, 8 working days to make a challenge and after that time has lapsed the indemnity claim cannot be challenged by L&Z.

The following reason codes L&Z can challenge if the supporting information is provided:
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The amount and / or date of the Direct Debit differ from the advance notice issued to a payer by a service user.

Options for a valid challenge:

Where yourselves can produce either:

• A copy of the advance notice, or

• A copy of a contract signed by the payer with details of the amounts to be collected and collection dates.

No advance notice was received by a payer.

Options for a valid counter claim:

Where yourselves can produce a copy of a contract signed by the payer, which includes the advance notice, and or the Advance Notice you have issued to the customer.

Direct Debit Instruction (DDI) cancelled by a paying bank. Where there is proof an ADDACS (Automated Direct Debit Amendment and Cancellation Service) Cancellation advice has been sent by a paying bank to a service user on or before the debiting day.

Options for a valid challenge:

Where a paying bank fails to send a cancellation advice to a service user on or before the date the debit was presented against the payer’s account. Or in the case of a paper indemnity claim, a paying bank fails to include the date of cancellation on the form. L&Z will have this information to send the challenge

A paying bank may request a copy of the payer’s authority before refunding the payer (applicable to AUDDIS service users), or they may contact the service user for further information, although there is no requirement for them to do so.

Options for a valid challenge:

Applicable to AUDDIS service users – where one or more of the following can be provided:

• A valid DD Instruction or establish one has already been provided and all other requirements complied with.

• Evidence of a contract signed by the payer specifically referencing payment by Direct Debit

• Evidence of a contract specifically referencing payment by Direct Debit – this need not be signed by the payer where they don’t dispute the existence of the contract, merely the payment method

A signature on a Direct Debit Instruction (DDI) is fraudulent or not in accordance with the account authorised signature(s) held by the paying bank.

Options for a valid challenge:

· Need a copy of the signed DD mandate by your customer

If you’re experiencing a Code 8 error when using the service, this article will provide guidance on how to troubleshoot the issue.

The code 8 error occurs when the service does not recognize the user.

If you are still unable to access the service after completing the steps above, please contact our support team.

A payer does not recognise the service user collecting a Direct Debit. Where a paying bank is unable to identify and consequently action a payer’s request to cancel a Direct Debit Instruction (DDI)

Options for a valid challenge:

Applicable to AUDDIS service users – where one or more of the following can be provided:

• A valid Direct Debit Instruction or establish one has already been provided and all other requirements complied with

• Evidence of a contract signed by the payer specifically referencing payment by DD

• Evidence of a contract specifically referencing payment by Direct Debit – this need not be signed by the payer where they don’t dispute the existence of the contract, merely the payment method

Along with the list or proof required above these are the must we require to make a challenge, if you can provide anything additional such as :

· Email conversations confirming DD set up

· Call recordings of the customer confirming DD to be set up over the phone and providing their information to do so

· Any communication/documentation to support any of the above claims

The only indemnity claim London & Zurich cannot challenge is under banking Regulations is:

CODE 4: PAYER HAS CANCELLED DDI DIRECT WITH SERVICE USER