All it takes is the stroke of a pen. This simple action, in which you agree to give a specific entity unbridled access to your finances, and allow them to automatically debit your checking account (as well as your credit card) at will, every month until Doomsday, can be a very slippery slope, indeed. As I recently discovered.
I'm currently involved in a dispute with the management company of the building I recently moved into. As a condition of the lease I signed, I was forced to give consent to allow them to automatically debit my checking account on the first of each month.
After a myriad of things went wrong; i.e., being locked out on day one, the elevator breaking on move-in day, non-stop construction outside my bedroom window for the past six weeks, etc., etc., my attorney suggested I contact my bank and put a stop on the ACH payment I originally authorized. Easier said than done.
The rep on the phone at -- surprise -- Chase informed me that in order to stop a recurring payment, it would cost $30, and I would need to give them a number range in which to do so. Thus, I gave them $1,000-4,000.00. At which point she told me this would act as a 'catch-all' -- not only stopping my landlord's request, but any and all requests that come in between those amounts. I didn't care, because my landlord's the only one who would request such a large amount each month, but it did seem strange to be forced to unwillingly snag all those potential 'dolphins' in the tuna net.
Alas, as expected, on July 1, I received a dozen emails from building management threatening to start eviction proceedings and informing me of the late fees I would accrue for each day my rent went unpaid. I didn't budge.
A few weeks went by and I began to wonder why I hadn't been served with a court date, so I went online, and, to my utter amazement, I noticed Chase had allowed the rent to be debited on the management's second attempt. Obviously, I was not a happy camper.
The next person I spoke with at Chase told me I had been misinformed -- that it is not the dollar amount, but rather, the name of the business, with which they then block the transfer from occurring.
My first question was, "If I had the name wrong, why did you stop the transfer the first time?"
To which, the Chase rep replied, "It must've been a glitch in the system."
It was at this point he informed me that I could file a claim, and that the money that was taken would be "temporarily credited" back to me while an investigation took place.
Great. "So, what you're telling me is that the money I told you not to pay, which you went ahead and paid anyway, will be given back to me -- but only temporarily -- and then, in a few weeks, if you rule in their favor, possibly taken away again -- potentially leaving my account overdrawn?"
This seemed utterly ridiculous. Paying $30 to stop an auto-withdrawal that may-or-may-not work? When I inquired if there was a way to 'guarantee' a stop-payment does not fail, he suggested I close my account.
"It's the only way to guarantee they can't access it," he said.
"You want me to 'jihad' my entire checking account -- and all the legitimate auto-debits I have set up (phone, cable, car payment, car insurance, health insurance, EZ-Pass, library card, etc.)-- all because of one reversed ACH? That's like going to a mechanic with a flat tire and being told your car's totaled!"
This whole exchange got my blood boiling. Here we are in an age where dogs are driving cars and the banks make it so easy to set up a million different ways to pay people, yet, if you want to put a stop on just one of those payments, you're shit out of luck.
I started digging around and it turns out this isn't just a Chase problem. It's system-wide.
Recent articles in The Times point to the ease at which some of these entities, such as payday loan services, can set up shop offshore, charge upwards of 1000% interest or more, and if you want to put a stop on it, they'll simply change their name or make the withdrawal for $.01 less.
Interestingly enough, while speaking with a spokesperson for Wells Fargo Bank, she said it happened to her when trying to stop an ACH payment to a gym she joined, which had since closed down, but was still withdrawing fees from her account.
The Obi-Wan-like advice I was given from multiple reps from Citigroup, Chase, Bank of America, etc., is to "Work it out with the company on the other end."
Oh, great. So, your answer to the problem is to put the ball back in our court and have us 'negotiate' with the very entity we're either in a dispute with, is illegal, or doesn't exist anymore? You'd have a better chance getting Israel and Hamas to an unchaperoned brunch.
This is yet another example of technology growing faster than the rules that govern it. And, while a few of our congressional reps are trying to make it harder for shady outfits to operate within the U.S., what about the rest of us who simply want to make stopping a payment as easy as starting one?
The one bright spot seems to be the folks at NACHA (the National Automated Clearing House Assoc.) -- the organization which oversees the entire ACH network, and which monitors the electronic movement of all money in the U.S. -- say their current proposal will address this issue.
NACHA recently issued an Operations Bulletin that states, "Changing the name of the company or the amount of an ACH transaction in order to avoid a stop payment order would be considered a violation of the NACHA rules."
That's great, gang, but, with all due respect; are you the agency that's in charge of all our online bank transactions or a frat house? A violation of your 'rules?'
Where's the "Violation of Federal Law" part?
In any case, NACHA has proposed formally adopting the above requirements into the NACHA rules, and hope to be able to announce these sweeping changes in the near future.
As to their definition of 'near future,' and what the penalty will be, your guess is as good as mine. Considering NACHA is funded by the banks --who, incidentally make a killing off these types of transactions, and that most questionable companies base themselves offshore, outside the reach of U.S. laws -- I wouldn't expect much.
There needs to be simple way to "turn-off" auto-pay to a company the same way you turned it on, without having to feel like you're playing Whack-A-Mole.
One thing's for certain; these horses are definitely not going back into the barn without a few, quick 'bucks.'