Thats the way i understand it to be as well.
Happened to me last month totally forgot about a DD. On the day of the DD because there was not enough funds in the account i got a referal fee of €4.44. But the amount of the DD was still taken from my account leaving me with a minus balance. Then the next day I got a returned DD on my account so my balance was back to what it was minus the €4.44 and then because the DD being returned i got another charge of €10.00
I bank with PTSB, and unless that has changed in the last month thats still the way they operate, maybe it's different with other banks.