Pitfalls of Automated Bill Payment 416
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?
I pay online (Score:5, Interesting)
Re:I use Paytrust (Score:4, Interesting)
I haven't heard of paytrust before, but is it really safe to have a third party looking at your bills?
Depends on what you are worried about. There's nothing in any of the bills I send to Paytrust that would bother me if it became public knowledge. If someone wants to alert Al Gore because I used too much electricity last month, I'd love the opportunity to laugh and slam my door in his face.
I pay my credit card with a direct transfer (my checking account and credit card are at same bank), so they don't get that statement. The cool thing about Paytrust is that you can send ANY bill to them, including ones that don't offer automatic payment. And if you want to change the account that is used to pay the bill, you only have to make a change in one place.
Firewalls (Score:5, Interesting)
You might want to talk to your bank about their policy on overdrafts. I found out, the hard way, that when my checking account had insufficient funds to cover a check I had written, they just took the money from another account I had with the bank. They had never asked me for permission to do that.
The cause of the problem was a data entry error by the person who reads the amount of the check and prints it on the check with a MICR printer. They got the numbers right but moved the decimal point one place to the right. From there on, everything operated on automatic pilot, with no human intervention until I received my bank statement and spotted the problem. The bank's attitude was that the most efficient way of doing business was to automate all processing and decision-making, fixing any problems after the fact, if a customer complained. I closed all my accounts with that bank, which is now part of Bank of America.
Re:Common practice (Score:4, Interesting)
True.
My phone/internet company actually wants even a little fee for not using automatic
debit payment.
I did this once and stopped it the first month (Score:5, Interesting)
When I moved into my last apartment I decided to do the auto bill pay. I'm just lazy with paying things and sometimes I'll forget to pay something.
Well, for those of you that pay a gas bill, you know they bill you an "estimated" rate, and then the actual the next month. Well, for a small apartment who's gas bill was maybe $20 for a month, they decided to take out a $320 "estimated" payment. They had no idea why it was so out of whack with the actual, but it was what it was. Normally you just send in an "estimated" payment as well, they just readjust your bill, and send you the actual the next month. Well, with the automatic payment, the bill said $320, and that's what they took.
It ended up just being that I told them to keep $320, and I just wasn't going to pay my bill for like 18 months. Which was fine with them. But they never actually fixed the estimation. The next bill, I had a $300 credit, following I owed $300, next month I had a $280 credit, etc. etc.
Long story short, you don't know what these people are going to charge you with. They take money first, and then just deal with you later if you don't like it. I'd rather pay a late fee, than deal with a CSR rep on why they took too much money.
Direct debit, e-billing etc. (Score:1, Interesting)
I have something of a system set up (although I don't follow it that strict):
1) Direct debit (company can withdraw the money automatically from my account): I use this for recurring, fixed payments (ADSL connection, bi-annual insurance payments etc.)
2) E-billing (I receive the bill electronically to my online bank, where I can approve or deny it): this goes well for monthly bills with varying totals, such as credit card bills. I can also change the payment total if I want to e.g. pay less than the full amount to the credit company.
3) Traditional paper bill: for magazine subscriptions (gives me a chance to think if I want to continue subscribing) and the rest of the miscellaneous billing
Automated payments destroy jobs (Score:2, Interesting)
A friend of mine told me that many of her colleagues at work have lost their jobs as a result of automated payment systems. And she's fearing her job might be next. She's a debt collector.
I don't use any form of automation. (Score:1, Interesting)
I receive paper statements, which includes a bill. When I receive said bill, I fill out a cheque and mail the payment.
It's that simple.
Why do I use this method? Because it's been established as the "norm" historically, and it also provides a hard paper trail for any billing transactions. "Actually sir, you owe us another US$35.49..." "Hmm, not according to this paper bill you sent me last month" "Oh, I'm sorry, you're correct".
The only caveats to classic paper billing are: 1) forgetting to send your payment, and 2) postal system goes fuck-all and /dev/null's your postal mail. #1 has happened to everyone, because we're human. #2 has happened to me a couple of times, and when reported, the postal service was quite concerned.
I'll trust my own ability to pay my bills over a computer or automated system any day. It amazes me how many people rely on automated electronic billing. All it takes is one fuck-up and your entire bank account or credit card could be out of funds. Is it really worth the risk?
Re:Firewalls (Score:5, Interesting)
The best way to deal with these policies, I have found, is to issue a written direction to the bank and hand it to your manager as well as mailing it to the bank's legal services division.
I have, for example, a written direction on file with my bank that they are to refuse any charges that would overdraft my account, regardless of whether they are preauthorized or not.
If the bank fails to uphold my explicit written instructions, they become responsible for the results.
Re:I pay online (Score:2, Interesting)
I like the way my phone company's website allows me to pay the monthly bill. On the site you set up your "payment wallet" by inputting your credit or debit card details which are saved and then when it's time to pay your bill you just click "pay bill" then a confirmation box and then it's done.
This method allows me complete control versus auto payments which could cause havoc if the funds aren't in my account on the particular day an auto account would be set to.
Re:I pay online (Score:3, Interesting)
BPay (Score:3, Interesting)
BPay: Your bills come with a bpay ID, and an account number. You can log into your bank's online system, and issue a payment to that ID and account numbers. Most banks will also allow you to schedule future or recurring payments.
BPay View: Via your bank's online service, you request that this account be registered for BPay View. You provide your billing information, and the account is registered. That biller can now issue bills to your account. They're not paid automatically, but you can login to your bank's online system and pay them. Alternatively, you can instruct your bank to pay them on their due date, when they're received, or a fixed number of days after they're received. Most banks will email you when you get a new bill.
This is the system I use, whenever possible. I get an email whenever a bill arrives, telling me how much it's for. It will be automatically paid on it's due date, but I can log in at any time to stop or defer payment. All money is handled by the banks, not via any third party. Because all major Australian banks have standardized on BPay, I'm not tied to any of them in particular.
It's easy and convenient, and I really can't find any problems with it at all.
Re:I use Paytrust (Score:4, Interesting)
I've been a PayTrust customer for a long time. I was originally a PayMyBills customer, but the service has been the same even after they were bought out. It works exactly as advertised, and I'm completely satisfied with what they do.
I use them because I am simply terrible at keeping track of paperwork. I know some people can do it. My mother can't understand why I can't do something that is so easy for her, but I fail miserably when I try. Things stack up, I lose track of which ones I paid with a credit card when they call me to collect the delinquent accounts, and if I want to look through my history, my files were so terrible I'd never find what I needed.
Then there was PayTrust. I don't think of it as automatic bill payment. Instead, it's an automated filing service, and a check writing service. They receive bills, and file them into various categories for me, keep track of which ones I haven't yet paid, and after I review them and tell them how much to pay, they print and mail a check on my behalf. The few bucks a month they charge much more than covers the late fees I used to incur by losing track of things. Even if it weren't for that, their fee would be worth it for hassle reduction, and for having easy to access, categorized records.
They have the ability to automatically pay things if you want. I use it for a few small, fixed costs, like my phone bill for the DSL line. My credit cards are set to automatically make a minimum payment before it's due if I haven't reviewed and manually set a payment amount.
I have had zero problems with their service ever. The fearmongering is completely misplaced, IMO. If I don't tell them to pay an account, they won't. I have full faith in that, because they have always handled it correctly in the past, and have no incentive to try to slime something by. I'm even a privacy nut, but really, there's nothing on my credit card that I care if people know. In a worst case if someone someone stole all their records and published them, they'd find out that I've *gasp* paid for porn a couple times. Bring it... The risk-reward profile is fine.
OTOH, I would never authorize a phone company to autobill my credit card (pull billing). Phone companies are detestable, soulless, unethical piles of crap, and have not earned the trust to have the responsibility of billing me the same amount every month and not silently try to tack on more services. I completely agree with TFA's criticism of this method.
Re:Verizon (Score:2, Interesting)
Re:Well (Score:1, Interesting)
If you've never had to reverse a charge or confront the billing party, what makes you so confident that it's as easy as your bank's marketing department tells you?
Everything is convenient and easy until it isn't. What's the potential cost to you of your landlord accidentally withdrawing 10x rent even once? What if it takes 30 or even 90 days to resolve?
Re:Well (Score:3, Interesting)
What's the potential cost to you of your landlord accidentally withdrawing 10x rent even once?
Very little - it'd just mean I don't have to worry about rent for most of the next year. That'd be quite nice.
I use a wide mix, cashless (Score:3, Interesting)
I have a regular visa and mastercard that I rarely use. I also have a visa debit card from my bank, I have cheques, and I have a payal account.
Most of my utilities are auto pay. They are either bound to my visa debit card or to my checking account. Things like the monthly power bill, internet service, and local phone bill. They used to mail me a statement but I've gotten most of them to emailing me my statements now since my mailbox mysteriously loses mail occasionally. Failure to receive bills in the mail was the primary reason I tried to get everything to electronic.
Some of my bills such as long distance and insurance do not offer direct payment, and half of them mail me a bill, the other half email me a notice to go to their web page to view my month's statement. For those I use my bank's "billpay" feature. I login to my bank web page and tell the bank who and how much to cut checks for. They keep the payee lists so I don't have to hunt down addresses or account numbers ever, and because I have opted for electronic statements instead of mailing me mine, my billpay service is totally free. I was expecting to occasionally have problems with a creditor losing a payment since it's not 100% the way they are expecting the checks to come in, or to have someone auto pay the wrong ammount, but in the last five years not a single problem has come up. Also, some of my bank's billpay are actually electronic transfers, because my bank participates in some sort of electronic payment network and has a lot of the big ones in the list. In either case, I don't even pay for a stamp.
Online purchases I do with my visa/debit card (as visa) or paypal. I avoid paypal unless necessary because the deductions on the statement say paypal and don't tell which vendor that payment went to, and I have a notoriously short memory on these things. Paypal is linked to my bank account and immediately directly deducts for purchases.
I try to use cash as sparingly as possible, and it's taken me a couple years to get proficient at it. I used to take out $20-60 every payday. Now I actually occasionally deposit cash and almost never withdraw it. And by this I mean I also don't just run to the ATM every time I need cash for a purchase. People that are always saying "I need to run to the ATM quick" need to get with the program. I use my visa/debit card for everything. I track my spending with a spreadsheet that contains my bank register back to 1995. Each entry is marked into one of a dozen categories, and allows me to see exactly where my money is going. There's a summary sheet that keeps track of stats. Entertainment, transportation, utility, home improvement, etc. I can tell you to the dollar how much I spent on gas or groceries this year or how much my heating bill went up over last year, etc. All possible because I don't use cash and have all those visa/debit receipts.
I've never been auto billed wrong, but I have had my visa/debit card hit twice by accident on half a dozen occasions. UPS, quickstar (gas), and mcdonalds several times, which is the only hassel I've had to deal with as a result of being cashless. UPS was the only one that requires me to take my printed statement into them to credit for the double charge, all the others merely required a phonecall. Looking at it from the other side of the fence, how many times have you been shorted on change when paying for cash? Do you really count it each time? I'm sure you've been shorted several times and you'll never know it. I know no one's gotten away with cheating me. So I think cashless is actually the safer way to go.
And I use on average a dozen checks a year. My bank is a credit union, has free everything, and pays me dividends on my balance in checking and savings. I don't see why anyone uses regular (non credit union) banks.
Re:Direct Debit Guarantee (Score:1, Interesting)
Lemme get this straight: his story never happened because it worked differently for you?
Re:Well (Score:3, Interesting)
What's the potential cost to you of your landlord accidentally withdrawing 10x rent even once?
Very little - it'd just mean I don't have to worry about rent for most of the next year. That'd be quite nice.
Nice for you that you've got enough liquid capital sloshing about that this wouldn't be a problem. Though since it was implicit in the original poster's comment that this *would* be a problem for most people, your answer missed the point- intentionally, I assume, so that you could make a smartass answer that was both smug and pat.
Anyway, if you're that well off, it'd probably make more financial sense to simply buy the place you're staying in.
Re:Well (Score:3, Interesting)
Nice for you that you've got enough liquid capital sloshing about that this wouldn't be a problem. Though since it was implicit in the original poster's comment that this *would* be a problem for most people
I make around 2750 euro a month after tax, of which I can save about 1250 a month, and pay 350 euro a month in rent. Having a spare 3500 to pay 10 months in advance is hardly a big deal. And I do NOT consider myself to be especially well off - I would consider that "most people" are probably in a similar situation. Anyone who does NOT have enough disposable income to afford 10 months rent in advance really needs to find somewhere cheaper to live.
Anyway, if you're that well off, it'd probably make more financial sense to simply buy the place you're staying in.
Hmmm... I am in no way interested in buying a crappy little apartment in downtown Hannover.
your answer missed the point- intentionally, I assume, so that you could make a smartass answer that was both smug and pat.
No, I did not miss the point - I simply do not accept that "most people" can not afford 10 months of rent.
Re:Well (Score:3, Interesting)
I [..] pay 350 euro a month in rent.
That's very cheap- in plenty of countries/cities there's no way in hell you'd get an apartment for anything like that.
Having a spare 3500 to pay 10 months in advance is hardly a big deal.
Really? Not everyone is in the position where they have that much money saved up beforehand. Not everyone lives in a city where they can get a passable apartment for 350 euro a month.
And even if they did have that money saved up as a "safety buffer", most people would not consider it acceptable that this buffer was gone just because some landlord had fucked up. I mean, seriously, you'd be quite happy if this happened to you?
And I do NOT consider myself to be especially well off - I would consider that "most people" are probably in a similar situation.
I would say that you're assuming too much- in particular that everyone is like you.
Anyone who does NOT have enough disposable income to afford 10 months rent in advance really needs to find somewhere cheaper to live.
So suppose someone's been looking for a job for some time, their savings have gone down quite a bit, and they finally get one in- say- London, where rent is hideously expensive. They should go live miles away, even if it means that they can't take the job, because they don't happen to have ten months rent (at London rates) in the bank? Yeah, that makes sense.
Hmmm... I am in no way interested in buying a crappy little apartment in downtown Hannover.
Which I take to mean that you're living in one? So given the choice, you'd rather pay rent on one- money down the drain- than own it, and then sell it later on?
No, I did not miss the point - I simply do not accept that "most people" can not afford 10 months of rent.
Then you didn't think things through very well.