It was the train ticket to bank-fee hell.
Three days after Taylor McKinley, 27, closed his checking account at Fifth Third Bank, an automatic $10 payment for his commuter pass re-opened his account. Over the next few days, other automatic payments were processed without his consent: a utility bill, an iPad app, a PayPal purchase. The bank added fee after fee for each overdraft and returned item.
About 10 days later, by the time McKinley noticed the Cincinnati-based bank's fee spree on his "closed" account, he owed $438.35.
McKinley's account-closing fiasco underscores exactly how difficult it is to leave a bank, especially in the era of automatic bill paying. Over the past few years, businesses have increasingly pushed customers to go paperless just as banks have marketed free bill pay as an account perk. It's not just convenience -- automatic deposits and payments can earn rewards and save on fees, both at the bank and with the biller.
When it works, the system saves consumers time and money. But when it doesn't work, it's an expensive nightmare.
McKinley, who lives in Chicago, said when he closed his account Jan. 20, he assumed any outstanding automatic payments would be rejected -- and no one told him otherwise. So when he saw his account had been reopened and overdraft fees had been charged, he made multiple calls to the bank to resolve the mistake. His calls were not returned. Frustrated by the lack of progress, he took a day off of work on Feb. 17 to meet with the branch manager during office hours. Meanwhile, HuffPost Money also contacted the bank on McKinley's behalf to verify the bank's policy, which is to not reopen closed accounts, according to a Fifth Third spokeswoman.
Finally on Feb. 22, more than four weeks after McKinley first tried to shut down his account, Fifth Third said it would reverse the fees and his account was closed for good.
"This was a unique situation," Stephanie Honan, assistant vice president and public relations manager for Fifth Third, told The Huffington Post. "Once an account is closed, nothing, including deposits or payments, would automatically reopen that account."
Account closing policies vary from bank to bank and often can be difficult to decipher. For example, Bank of America's policy allows it to re-open a bank account if it receives a payment or deposit into a closed account. At other banks, including Fifth Third, the policies say that once a bank account is closed, it remains closed.
As McKinley found out, it doesn't always work that way.
On his visit to the bank to clear up the mess, McKinley said he asked the branch manager to see the bank's policy in writing. "We both flipped through the document for about five or 10 minutes, and neither of us could find any statement that accounts can be re-opened," he said. "Not to mention why or exactly how they do such a thing."
But McKinley said it was not even the fees that disturbed him as much as the time-consuming hassle to clear up the mess. "If [customers] don't have the time (I used part of a vacation day) or stamina to cut a deal with the branch manager, they're out of luck," he said.
Consumer experts and banks said it is the responsibility of the customer to ensure all automatic credits and debits have been transferred to a new account before closing an old one. Some personal finance experts advise moving money in phases from an old bank account to the new one over a month or two so that any automatic bills have a chance to clear before the account is closed for good.
Another solution, of course, is forgoing automatic bill pay all together. But that means losing all the benefits and cost-savings of automated accounting.
"Don't allow companies to come into your bank account and take payments out," advised Linda Sherry, a spokeswoman from Consumer Action, a nonprofit consumer education group. "We think that it is much more consumer friendly to set up a bank account and set up your own bill payments, rather than automate them through ACH."
Automated Clearing House, or ACH, is an electronic network for many kinds of financial transactions, including salary deposit and bill payments.
There are few laws to protect consumers from electronic payment oversteps and protections around account mobility, such as transferring from one bank to another. Only last week, did the Consumer Financial Protection Bureau set up a complaint forum on its website to field complaints about bank accounts. A bill introduced in the fall by Rep. Brad Miller (D-N.C.) that would have added more consumer rights to move financial institutions has all but died on Capitol Hill.
Meanwhile, consumers are stuck paying the bill.
In February, Matt Lanning, 40, of Breckenridge, Colo., checked his own closed Bank of America accounts, which he had shuttered in November. What he found shocked him: He was $197 in arrears after fees and interest charges had accrued for months on the closed checking account. To avoid further headaches and dealing with the bank, he just paid and re-closed his account.
"The biggest problem is that I will never know that they will never open the account again," Lanning said.