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Pitfalls of Automated Bill Payment
theodp writes "A few months ago, the NY Times' Ron Lieber extolled the virtues of allowing utilities, phone, and credit card companies to pull whatever you owe from your bank account. Big mistake. Lieber's readers fired back, telling him he was out of his mind for suggesting that they give billers unfettered access to their credit cards and bank accounts. Now Lieber goes through five of the glitches that can occur with any of the various methods of setting up automatic payments: 'You can give each biller permission to pull the full amount from your bank account. You can use the online bill system at your bank to push payments out automatically each month. Or you can charge every bill to your credit card and give only that card company permission to pull money from your bank account when the credit card bill is due. Each of these methods has its potential shortcomings ...'" What kind of payment automation do you use, and why?
End of story. Why give them the access when it takes 10 minutes to simply do it myself?
I haven't heard of paytrust before, but is it really safe to have a third party looking at your bills?
Part of the hardcore faithful who believed in Apple long before it was cool again to do so
An Automatic Payment is something where the money is pushed out of your account at your end
Direct Debit is where a company has access to your account to withdraw
Yes, companies often 'forget' to discontinue the Direct Debit when you cancel services with them. People who use this method probably also fall for Hire Purchase and Lease to Own deals too
Every time I log in to any online payable account, they neg me to set up automatic bill payments. But personally, it's worth the half-hour to an hour of my time -once a month- to fill out an online form. Why would I give anyone unfettered access to my money? What if I have some sort of emergency crop up? I have heard numerous times from co-workers how the automatic deduction will roll out way too early (three weeks ahead of schedule at one point), causing overdraft fees that are entirely the deductor's fault. If they fuck up, the corporate machine would take months if not years to settle any kind of litigation in the event that their customer service department does not agree with my claims. I'll do the one-time payments, thanks. I figure it's worth the hour to control when and where I disperse my money.
Perception is the thin dividing line between reality and fiction.
I use the "get my ass to the post office method. I'd pay online, but Korea uses an ActiveX plugin instead of SSL. Even if I had ActiveX, there's no way I'd do that.
Put identity in the browser.
I pay my bills online every month. That way I know exactly what I am paying. It's not that hard. The automatic payment thing is scary to me, because it takes control out of my hands. The only bill I pay automatically is my gym membership, because they wouldn't have it any other way. But at least that bill is the same every month.
I'd hate to pay my power bill automatically because it would have been a total surprise to me last month when it jumped from $50 to $160.
None, for several reasons.
1) Billing errors occur. Don't allow them to take your money until you've verified the bill is correct. Otherwise, even if they correct the bill, you will never, ever get a refund.
2) Balance errors occur. Most banks will slap you for a $30-$40 NSF fee if someone sends an ACH debit transaction that's in excess of your available funds, whether or not they actually pay the ACH. Further, many banks play games about how fast they credit ACH deposits (like your direct deposited paycheck), or regular deposits (like your paper paycheck), in an effort to increase the likelihood you'll have an overdraft. What's more, when you swipe your debit card at a merchant, they can place a hold on your funds even if the final charge isn't anywhere close to the actual transaction amount. (Example: Buy $20 in gas at your local pump and find they "authorized" your card for $75. The bank holds the $75 for anywhere from 3 to 30 days. If you try to spend any of the $55 difference, they slap you with an overdraft fee because the funds were not "available," even though they're still "yours.")
3) Emergencies occur. If I need to take my kid to the ER and shell a large amount of money so that he'll have an eye tomorrow, I shouldn't have to call the electric company to get them to stop the payment so I can do it.
Most banks allow online bill payment, and many don't even charge a fee to use it. The good ones will even present my remembered vendors in a list, and allow me to simply enter the amount I want to pay, the date I want to pay, and click "send." Automatic payment benefits only the vendors and the banks, never the customer. I do not exist for a company's benefit; they exist for mine. Just because they prefer to swipe my account on the due date doesn't mean it's to my benefit to let them. They can take a paper check (or a CheckFree deposit) when I'm damned well good and ready to send it to them, and not a day before.
Remove the caps and hold to a mirror.
I use my own bank's bill-pay system, because they take all responsibility. If it says a check is to be to my electric company by the 15th and it isn't, THE BANK calls the electric company and explains the situation, then deposits any late fees into my account.
In the past using my billers' systems has been a nightmare or two.
One double-billed me one month and would not refund the second billing because my next bill would be due by the time the return would process. The bank could not reverse the charge because the payment came in with my authorization.
I've had more than one bill me too early.
And recently my cell phone bill was over $500 in error two months in a row because of a missing billing code on my data plan. All sorts of fecal matter would have hit the fan if those payments had been automatically debited.
And other incidents of which I cannot recall the details.
Unless the biller is willing to take responsibility for errors on its end and IMMEDIATELY return money taken in error, as well as cover whatever fees or damages are incurred due to the error, payments come via bank bill-pay only. And if that is not acceptable, then the account gets closed and I move on.
And this is bad how? I'm sure buggy-whip and horseshoe makers bemoaned the loss of their jobs with the advent of that new-fangled motorcar gadget. I'm sure those debt collectors can adapt.
'He who has to break a thing to find out what it is, has left the path of wisdom.' -- Gandalf to Saruman
It's not a universal constant that reversing charges has to be difficult, and nor is it that you should incur overdraft fees that aren't reimbursed when a charge is reversed. It's down to the banks to handle the practical implementation in a way that consumers would agree with, but that does nothing to change the evidence suggesting that the concept itself, when properly implemented, is very successful.
Nobody has access to any of my accounts but myself. Not even my wife.
I hope you've got things sorted out well for emergencies. Somebody has power of attorney, yes?
You are in a twisty maze of processor lines, all alike.
There is a lot of hype here.
Oh we know but this is a primarily American site. That's like going to America and then complaining that we're too American. Your point would (is, really) valid on sites like theregister.co.uk but not here. Not all sites on the internet are going to cater to your whims, you can create your own or find a more local site if you want. That is the beauty of the web.
"So long and thanks for all the fish."
In the US it has been made very easy to set up a bank -with the result that many people, some with fraudulent intentions, do just that. (At the other end of the scale I know of a small community of professional people that set up its own bank just because they didn't trust the big ones, and it was very successful. I am not suggesting that Americans are less honest than Europeans, that is far from the truth.) In Europe the banking system has deep roots in the Jewish community becaue Jews were discriminated against - they could not own land but were allowed to charge interest - and this tension has created what is, on the whole, a very successful and honest banking system. (In fact in the UK banks were also started by nonconformists like Quakers for much the same reason - Barclays being an example.)
The result is that until the madness of the last ten years our banking system was very trustworthy and we were prepared to believe in direct debit systems - which on the whole work very well. Meanwhile in the US banks were still settling interbank transfers with bits of paper, and this is still an issue today - in Chicago we had to set up an account with a subsidiary of the (British) NatWest just to avoid ludicrous delays and overcharging for simple transactions. This is ultimately because in the UK many bankers knew they were less than honest, and so were not inclined to trust other banks. The present credit crisis is because, after years of unregulated credit and junk assets, banks have discovered once again that they cannot trust one another. Paypal is an example of a system that was set up to deal with what is really a US problem, not a general problem.
The answer to direct debits is to make the system as robust as European systems - which make the person asking for the money extremely liable if they make a mistake. But this is unlikely to happen, because US law favours corporations over individuals. And, given Obama's choice of running mate and his connections, voting either way in November won't have any effect.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
/agree
Its a lot easier to dispute a bill when you haven't paid it. Once they have the money, its pretty hard to get it back.
-- "So they told me that using the download page to download something was not something they anticipated." - Bill Gates
There seems to be a common assumption, even here on Slashdot, that your money is somehow safer if you don't entrust it to a third party (such as a bill payment service). A few months ago, I was talking about check fraud with someone who doesn't do any online banking at all. I asked him if he writes checks, and he said "Only to the electric company!"
I don't know about you guys, but I haven't audited my electric company's processes lately. Anybody here know the name of the person at NStar/ConEd/etc that opens the mail? Anybody sure if the mail is even opened by an employee, or if it's contracted out to a vendor of theirs? Do they even do the data entry locally, or do they throw it in a scanner and have the data entry done offshore, like radiology labs do?
I don't see any reason to think that writing a physical check to the electric company is any less secure than doing it online, where I have a reasonable assumption that at least it's not going to go through human hands for payment processing. (Unless, of course, that online payment becomes a laser check, which then is subject to all the same vulnerabilities.)
Summary: I think you generally have no way of knowing if your payment method is secure or not. I just assume it probably is, and that I have legal recourse if I'm wrong.
I've seen seven non-Windows machines in four years in this country. They were all owned by foreigners. Four belonged to me.
Are there any large, English-language websites in Korea? I'd like to visit them in Firefox and then write to the webmasters with the problems I encounter. Having the web OS-neutral will be the first step in solving the problems that you describe. My own country was not too different until about two years ago, and I've been actively contacting webmasters for about five years demanding OS- and Browser-neutral websites.
I encourage you to write to them as well. If they don't hear from us, they won't know that there is a problem.
It is dangerous to be right when the government is wrong.
I started with PayMyBills. I abandoned them and switched to Paytrust after PayMyBills got behind on processing incoming bills and were making late payments.
Yep. I used paymybills.com too, and loved them- right up until my car insurance got canceled because they didn't process my bills for two months. It was a really great situation, because, not being bills, they also didn't 'process' the cancellation warnings and notices that they surely received. I really like the idea of 'outsourcing' bill paying but I don't trust anyone to manage it properly except myself.
Exactly, I have a dedicated credit card just for bill payments that gets fully paid off each month. It allows the automatic payments to be set up, but acts as a buffer to my bank account in case of an error, plus I get to defer payment for 25 days or whatever. Finally, the credit card I use for this is a cash-back card, so I effectively reduce all of my bills by 1%. Billers that don't support credit card payments I use online banking to send a check. I've been a victim of one of those 38-in-100,000 billing errors, I had a DSL company once withdraw $1,300 instead of $56 because of a "glitch" in their system. If that happened against my bank account it would have been a much larger problem.