Online pay systems scare me
With the technology available today, many people prefer to have their accounts paid automatically from their bank account. Charges such as telephone bills are processed directly to one’s bank account and then paid by the bank, oftentimes without the knowledge of the customer unless he/she reviews the account on line.
Today I read about a real nightmare in the L.A. Times. Verizon charged one customer for his cell phone bill, a charge just under $10,000. The bank said it normally doesn’t pay bills where there would be an overdraft; but when the vendor bills the account three times, the online bill pay system honors the third attempt and the customer is charged for the overdraft.
In this case, the bill was in error. The customer did not incur the charge. It was an error. And neither Verison nor Bank of America would reverse the entries without great effort and much consternation by the customer.
That is a perfect template for disaster! And the reason that this technology is one that I choose to avoid. I choose to retain control over my banking relations and vendor payments. This part of technology still frightens me.
Have you had any experience with such technology miscues?
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There will always be errors in any system, they tend not to be as perfect as people are (?). However, the use of ACH Debit transactions to pay bills, especially reoccurring bills from trustworthy vendors substantially reduces our carbon footprint and identity theft. Do people or businesses really want to get paper bills in the mail anymore? Do they then want to write paper checks, stuff them into envelopes, buy poatage stamps and mail them? Electronic paymant of fees is so much more effecient. I like to use my EZPass for toll roads too.
First, the bank should never honor any attempt if this results in an overdraft. They should leave it between the merchant and customer to settle the issue. Second, the bank should reverse any automatic charge on the first indication of the customer and leave it again between the merchant and the customer to settle. This is common practice for automatic payments in most banks in Europe and has nothing to do with online bill paying nor any other technology but everything with banks being trusted intermediaries. If a merchant says I want X from customer and customer says no, who is right? Certainly the bank is not the judge!
Ed, you have every reason to be scared if this behavior is not implemented.
A financial institution should not allow any ACH Debit transactions that will create a negative balance for their account holders. But then again, what financial institution would pass up the chance to make a quick buck by charging an overdraft fee? There are a number of financial institutions that will charge the fee, whether they pay the ACH Debit or not.