Bank Advice

[Eric the Grey]

Given the vast amount of knowledge here, I thought I'd pick a few brains before yelling "Lawyer" at my bank. Well, it's a credit union, but they're pretty similar.

Anyway, this past Friday, I submitted an online bill-pay to one of my credit card companies for $100.00. Stupid me (yes, I admit that I probably did this), I missed the decimal point, turning that into $10000 (yes, ten thousand dollars). I received my email notice of the transaction on Saturday (late enough in the day that they were closed) that the payment had gone through.

Ok, closed Sunday and Monday for the 4th, means the earliest I could speak to someone is Tuesday. By the time I had gone to do this, the transaction had been pulled from my checking account, leaving me with a balance of -$9000 (yes, they took out almost 10x the amount of money I actually had in my checking account).

Then of course, they charged me a $31.00 NSF Fee.

I've worked with the bank, and with the credit card company both to try and resolve this as fast as possible. I have an outstanding rent check, and a debit card transaction coming today for my insurance. So far, no luck on either front.

My bank cannot do anything about it, even though originally they told me they could stop it yesterday before it was actually processed. Apparently not. The credit card company has to put through a "payment dispute" to investigate the issue. They say they'll get back to me in 7 to 10 business days.

*sigh*

My question is, what legal grounds do I have? They sent that money knowing damn well that I didn't have that much money, and charged me a fee to do so.

The only bright side to this is that one of the folks there separated my savings account which would have also been depleted by this fiasco (still leaving us with a negative balance), leaving us with nothing at all. As it is, we'll survive, but I don't much like it considering that our savings is planned to go as a down-payment towards a new home.

The people at the bank I've worked with so far has bent over backwards to help, but the one comment I heard from another person over the phone (it's clearly not *banks name*'s fault) doesn't thrill me much.

I'd like to get back the fees this is all costing me, both from the bank and what I'm paying in late fees (and bounced check fees). I'm not looking for money, just to get back what I'm loosing in all this.


Eric the Grey

[Chanlin]

I am not certain of your legal foothold since the mistake in part was yours. It does strike me odd that they would clear a payment for more than was in the account so readily. If you haven't asked, I would at least inquire as to how such was allowed to happen.

In my own experience I had my account overdrawn by a recurring payment to an MMO that I had forgotten to cancel after I had lost my job back in 2002. Much the same as your situation, it took some negotiating with the bank and credit card companies, but they did eventually reverse the charge and allowed me to zero out my bank account and close it without having to pay the overdraft fees.

That being said the best advice I can offer is stick your guns. Do everything this site advises as to not being an SC ie be polite, but firm and continue to insist it was an honest mistake. They happen. It seems like the bank is at least willing to work with you on the matter and I can't see why they wouldn't view it as an honest mistake either.

That being said I would seek out actual legal advice if you can just in case you end up needing it.

EDIT:: In rereading this I see that you admit the mistake could be yours, but might not have been. I would inquire into the possibility that the computer would allow you to enter a payment for more than is in your account. I know my current banks system won't allow it without dozen's of "This will overdraft your account" warnings popping up.

[Chromatix]

Quick look at Wikipedia (while discovering precisely what NSF stood for):

Non-sufficient funds (NSF) is a term used in the banking industry to indicate that a demand for payment (a check) cannot be honored because insufficient funds are available in the account on which the instrument was drawn. In simplified terms, a check has been presented for clearance, but the amount written on the check exceeds the available balance in the account.

[...]

If paying the item puts the account holder in a negative status by a relatively small amount, the bank may choose to honor the check. When this occurs, the account will be overdrawn, and the fees charged by the bank will place an extra burden on the account until the overdraft is covered. This is a civil matter with the holder's bank and not likely to be subject to outside reporting if settled quickly enough.

If the paying of the item would place the account quite deep in the hole, the bank will likely choose not to honor the check. The item will be returned to the depositor's bank, and ultimately to the depositor. The amount of the check plus the depositor's bank's fee will be debited from the depositor's account. The depositor then may choose to re-submit the check, hoping it will clear on a second attempt, or else proceed immediately with collection activities, civil or criminal.

It's pretty obvious that your bank didn't follow normal practice here - $9000 is not a small amount of money by almost anyone's standards. I'm mildly surprised that the credit card company also didn't notice that the amount was (presumably) much higher than your card balance.

All the same, missing out a decimal point should count as an "honest mistake" which you shouldn't be penalised for. For all they know, your finger just slipped off the key. It probably happens every week somewhere. My online bank requires the decimal point (locally it's a comma) to be present, presumably to avoid such errors before they occur.

One thing I've noticed when dealing with banks is that they seem perfectly incapable of noticing that one number is bigger than another one... until the precise moment when doing so earns them the most money. So they will indeed let the transaction through (by failing to notice the difference between the payment and the balance) but then immediately turn around and charge NSF fees, overdraft fees, and punitive interest on the "unarranged overdraft".

A few years ago, when I was struggling with my bank back in England, I sat down and tried to figure out any other course of action that could have earned them more money than they actually did. I failed. I came up with quite a lot of decision trees which made more sense and which would have allowed me to continue using the account, due to there being far fewer charges and fines piling up on each other. At one point I was charged £70 for a bounced £1.30 direct debit, but by that time I had already been forced to take my earnings in cash so that I could still buy food.

I eventually forced them to give it all back, plus coverage of court filing costs, plus statutory interest. They then closed the account out of spite, leaving me unable to obtain a debit card due to a ruined credit rating. Immediately afterwards, I landed a much better job...

So I can't give you any advice to speed up the process, but I can tell you that the bank are in the wrong here. The best thing to do might be to explain to your landlord what has happened, and promise to get the rent to him as soon as the bank makes it possible.

[Ghel]

One of the problems with online bill pay systems is that no human ever looks at the transactions. They're all processed by computer. If the computer isn't set up to recognize that a transaction could overdraw an account, well, it can lead to situations like yours.

As a bank employee, I have a little bit of free advice for you. (Take that for what it's worth.) Admit to your credit union that it's an honest mistake (sounds like you've already done this). Tell them (politely, as others have mentioned) that if the bill pay had warned you that this would overdraw your account, you could have double-checked the amount. Ask why bill pay didn't warn you that the transaction would cause you to overdraw. It's possible that their bill pay system doesn't talk to their accounting system, in which case, suggest to them that they update their bill pay system.

As for legality of whose "fault" it is, a lot is going to depend on your account agreement. If you don't have it, ask for a copy of your account agreement and any disclosures that go along with your account. They may even have a separate agreement for online banking and bill pay.

But I don't think "fault" is going to be an issue. It sounds like your CU is trying to work with you as best they can. I would continue to ask if they can reverse the NSF fees, since it was a combination of an honest mistake and obsolescence of their bill pay system. It sounds more like you'll just have to wait for the credit card company to finish their investigation and, hopefully, return the money.

[Eric the Grey]

One of the problems with online bill pay systems is that no human ever looks at the transactions. They're all processed by computer. If the computer isn't set up to recognize that a transaction could overdraw an account, well, it can lead to situations like yours.

This is quite true. I would think that the system would automatically reject any payment that will take an account into the red. Perhaps it's something that hasn't happened yet? They've only had their online bill-pay for a couple of years now, maybe not even that long.

As a bank employee, I have a little bit of free advice for you. (Take that for what it's worth.) Admit to your credit union that it's an honest mistake (sounds like you've already done this). Tell them (politely, as others have mentioned) that if the bill pay had warned you that this would overdraw your account, you could have double-checked the amount. Ask why bill pay didn't warn you that the transaction would cause you to overdraw. It's possible that their bill pay system doesn't talk to their accounting system, in which case, suggest to them that they update their bill pay system.

As for legality of whose "fault" it is, a lot is going to depend on your account agreement. If you don't have it, ask for a copy of your account agreement and any disclosures that go along with your account. They may even have a separate agreement for online banking and bill pay.

But I don't think "fault" is going to be an issue. It sounds like your CU is trying to work with you as best they can. I would continue to ask if they can reverse the NSF fees, since it was a combination of an honest mistake and obsolescence of their bill pay system. It sounds more like you'll just have to wait for the credit card company to finish their investigation and, hopefully, return the money.

They are trying to work with me so far. I haven't broached the issue of the fees yet. I figured it would be best to work with the CC company to get that resolved and the money back into the banks hands as soon as possible and then worry about the fees.

I've been pretty calm with everybody involved, more so than I expected I could be. Perhaps being a SD Tech has helped.

The thing that gets me is that over the past year or so, they've offered the choice for overdraft protection, being either they pay debit and checks that take us negative, or either take money to cover from savings if available, or decline the charges. I choose to NOT let them cover and just charge me. The one person I worked with stated that was only for checks and debit cards, and didn't apply to online bill-pay. Seems confusing to me.


Eric the Grey