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The Almighty Buck

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?
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Pitfalls of Automated Bill Payment

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  • D'uh (Score:5, Funny)

    by The Ancients ( 626689 ) on Sunday August 31, 2008 @03:16AM (#24816963) Homepage
    There's plenty of credit card details that can be bought for $20 on the internet. Problem solved!
    • by Z00L00K ( 682162 )

      As long as I don't have to pay with checks I'm good. I don't have checks and don't expect to need any either.

      Anyway - it depends on who I'm paying, but the insurance is paid by permission monthly. A fixed sum that always goes the same way so it's no big problem.

      Other bills are paid through the bank service internet page into their account. Signed with a challenge/response token to make sure that the recipient and amount are right.

  • by Anonymous Coward

    I pay all of my bills in Linden Dollars.

  • Well.. (Score:2, Funny)

    by Entropy98 ( 1340659 )
    As long as it not AOL or Paypal what is there to worry about?
    Find My IP Address []
  • I use Paytrust (Score:5, Informative)

    by ptbarnett ( 159784 ) on Sunday August 31, 2008 @03:20AM (#24816975) []

    Most of my bills are transmitted electronically. The rest are mailed to Paytrust's P.O. box, and they post the scanned PDF for my review.

    I set the payment rules via their website: pay full amount, pay full amount up to [limit], pay specified amount. Or I can just wait for the notification in my email and pay it myself with a few bill clicks.

    • Re: (Score:3, Insightful)

      I haven't heard of paytrust before, but is it really safe to have a third party looking at your bills?
      • Re:I use Paytrust (Score:4, Interesting)

        by ptbarnett ( 159784 ) on Sunday August 31, 2008 @03:35AM (#24817043)

        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.

    • []

      Most of my bills are transmitted electronically. The rest are mailed to Paytrust's P.O. box, and they post the scanned PDF for my review.

      I set the payment rules via their website: pay full amount, pay full amount up to [limit], pay specified amount. Or I can just wait for the notification in my email and pay it myself with a few bill clicks.

      That's rather an interesting concept for an service. Just as i were thinking reading the summary that why do not banks have "pay upto X amount" kind of limitations, you come up with a comment about paytrust :D

      Unfortunately, i think there's no such service in Finland

    • by Anonymous Coward on Sunday August 31, 2008 @04:34AM (#24817411)

      I was an early adopter with Paytust (back when they were They were bought out by Intuit. I'm still with them today. Here's why:

      BORING: Yes, you can do the simple bill payments that you can do with many bank accounts now. You can send a check to a name or an address for a certain amount, perhaps against a specific account number. They'll put everything together and mail out the payment for you.

      EXCITING: What makes this service shine is bill RECEIVING. You got bills that come to your house? You change your billing address. You give them a special PO BOX # that is provided with your account. Paytrust will scan the bill in as PDF format. They'll pre-populate the bill's data into your account, matching it with one of your known billers, and doing the data entry for the minimum amount due, the total amount due, and the due date.

      In my case, I still micromanage. I get an email from them saying that some new bills came in (and provides the basic details of the bill that I just mentioned). So, most of the heavy lifting is done for you so that when it comes time to pay the bill, it is just 'click a checkbox', 'click a button', and 'click a button to confirm'.

      You can set up autopayment rules (which I haven't done) to auto-pay a bill if it is under a certain amount, or to pay off the full balance, or pay against the minimum due, or whatever. I know that they've got some flexibility there.

      They're got some added protection for detecting duplicate bills (more than 1 bill in a billing cycle), and also, more importantly, the 'missing bill', to let you know that normally you receive a monthly bill from a company, but nothing ever came.

      ORGANIZING: If you read between the lines to see the net effect of all of this, here it is. Basically, I log onto their website. The main screen tells me the bills that I have yet to pay. The bills that I have paid will drop of of that screen. So I instantly know, at any given time, what has or hasn't been paid. Which is so useful to me, I haven't had a late payment on anything since I adopted their service. That has contributed to my credit score reaching a very nice level (and my avoiding late penalties, and punitive APR increases).

      RESEARCH/HISTORY: A scan (again, PDF) is kept online for a year (after which, they offer archival CDROMS. So you can go back and, say, figure out when a charge was put on, or when you interest rate changed, or how much electricity you used a year ago. Totally worth its weight in gold in doing the kind of research that only the most organized freak could do before.

      You've also got a good summary screen of every payment you've ever made through the system, so you can find out, say, what were the last 10 payments I made to Chase?

      Small unexpected but appreciated service: if my credit card company sends me a credit card, or I get a really weird non-bill letter (that isn't spam), they'll forward it to my real address.

      So, I hope I don't come across as a shill for these guys, but I'm absolutely a great fan. Their service has really saved me so much time, money, and frustration over the years. One of the best kept secrets of the web, IMHO.

      • I was an early adopter with Paytust (back when they were They were bought out by Intuit.

        A clarification: was originally a separate company. They were acquired by in September 2000.

        I started with PayMyBills. I abandoned them and switched to Paytrust after PayMyBills got behind on processing incoming bills and were making late payments.

        Intuit acquired Paytrust in late 2004.

        • by llamalad ( 12917 ) on Sunday August 31, 2008 @10:08AM (#24819189)

          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 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.

          • Re: (Score:3, Informative)

            by whoop ( 194 )

            Their page says they will cover things if their service is late. Did you take that up with them? Looking at the service (and several raves people give it here), I'd be curious how well they handle problems like that.

          • Re: (Score:3, Informative)

            by ptbarnett ( 159784 )

            I really like the idea of 'outsourcing' bill paying but I don't trust anyone to manage it properly except myself.

            It's certainly not "fire and forget". I monitor bill payments with a calendar in Quicken, and reconcile my checking account automatically (online) a couple of times a week. So, I recognize a missing payment before it becomes a problem, and make a manual payment if necessary.

            Since moving to Paytrust, the problems has always been the biller. At one point, a company actually cut off my service for non-payment, and it was Paytrust that provided the proof that the bill was paid via EFT.

    • Re:I use Paytrust (Score:4, Interesting)

      by subreality ( 157447 ) on Sunday August 31, 2008 @06:17AM (#24817959)

      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.

    • by Curunir_wolf ( 588405 ) on Sunday August 31, 2008 @08:51AM (#24818721) Homepage Journal

      Ha! My automated bill payment system is *much* better, and I've been using it for many years. It validates the bills when they come in, and only pays when they are due. It maintains my account balance and lets me know at any time what my balance is doing and what's coming due. It follows up with creditors with any billing errors, too, and ensures they are corrected. It even balances my checkbook every month.

      The only downside is that it's pretty expensive. Yea, all my bills get paid, but most of my leftover income goes to maintaining the service!

      It's called "my wife".

  • I pay online (Score:5, Interesting)

    by fishyfool ( 854019 ) on Sunday August 31, 2008 @03:21AM (#24816977) Homepage Journal
    But none of them are automatic withdrawals. Every month I take the time to go to the website of the biller in question, and tell them exactly what I want to pay. That way if there's a mistake, It's my mistake. I also have a specific checking account I use for online payments. I only transfer enough to pay what I said I'd pay and not a dime more. Just as a layer of insulation between my checking account and my bill account.
    • Re:I pay online (Score:5, Insightful)

      by Daengbo ( 523424 ) <daengbo AT gmail DOT com> on Sunday August 31, 2008 @03:34AM (#24817037) Homepage Journal
      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.
      • Yes I noticed that ActiveX is rather popular in South Korea. At one place where I worked there the internet gateway would not give you any external pages if you had a USB drive connected to the workstation. The weird thing was that people had worked with this system for years without finding that "feature", until I asked them to download a file for me.
        • Re: (Score:3, Interesting)

          by Daengbo ( 523424 )
          I've seen seven non-Windows machines in four years in this country. They were all owned by foreigners. Four belonged to me.
          • Re:I pay online (Score:4, Insightful)

            by dotancohen ( 1015143 ) on Sunday August 31, 2008 @08:43AM (#24818681) Homepage

            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.

            • Re: (Score:3, Informative)

              by Daengbo ( 523424 )
              As far as I know, the government requires the banks to use the ActiveX plugin for banking purposes.

              No, the Korean websites aren't really in English. No one uses Google or Yahoo! here. They have their own search (Naver), e-mail (Hanmail), social networks (Don't remember the name), and even office suite (Hangul Office). If it weren't all based on a foreign OS, I'd actually kind of respect their "independence."
      • Re:I pay online (Score:4, Informative)

        by hedwards ( 940851 ) on Sunday August 31, 2008 @12:54PM (#24820465)

        That would be a cautionary note about impatience. That problem dates back to the period right before SSL was finalized when the South Korean government mandated an ActiveX approach to securing banking connections.

        The official SSL spec came out only about 6 months or so later, but by that time there wasn't really much interest in fixing the error.

        Fast forward to today, and it means that it's basically impossible for non-Windows computers to access those services.

    • Likewise... (Score:5, Informative)

      by Hamster Lover ( 558288 ) * on Sunday August 31, 2008 @03:48AM (#24817107) Journal

      I live in Canada and pay all of my bills through my bank's web site. As much as people like to rail about the lack of competition in Canada due to the fact that there are only five chartered banks for the entire country (other than credit unions, but they are provincially regulated), all five of the chartered banks offer sophisticated on-line banking (some more sophisticated than others). Hell, I even paid my property tax to the City of Calgary on-line. There is no futzing around with the biller in question and arranging electronic payments, you simply add them to your payee list on your bank's website.

      Now, I could set up automatic bill payments, but I had a bad experience with the Royal Bank and a student loan; that isn't going to happen again.

    • Firewalls (Score:5, Interesting)

      by Detritus ( 11846 ) on Sunday August 31, 2008 @03:49AM (#24817117) Homepage

      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:Firewalls (Score:5, Interesting)

        by Atlantis-Rising ( 857278 ) on Sunday August 31, 2008 @04:37AM (#24817423) Homepage

        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.

      • What exactly would you rather they did? Have a second person double check the amounts on the check? It seems very easy for that person to make the same mistake as well

    • Re: (Score:2, Interesting)

      by REALMAN ( 218538 )

      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.

  • I don't. (Score:5, Insightful)

    by Leptok ( 1096623 ) on Sunday August 31, 2008 @03:21AM (#24816979)
    End of story. Why give them the access when it takes 10 minutes to simply do it myself?
    • Re: (Score:2, Informative)

      by Hognoxious ( 631665 )

      Why give them the access when it takes 10 minutes to simply do it myself?

      Because you'll forget and get stung with interest and/or penalty fees?

      • Safety vs. Security?
      • Re:I don't. (Score:4, Insightful)

        by Dionysus ( 12737 ) on Sunday August 31, 2008 @05:00AM (#24817549) Homepage

        Because you'll forget and get stung with interest and/or penalty fees?

        Which is why I set up payment the same day I get the bill. Basically, I get online notification (usually email) that a bill is due. I log into my bank and set up the payment with the payment happening on the due date. Then forget about it.

        With email notification, I don't delete the email until I set up the payment.

    • Re:I don't. (Score:5, Informative)

      by Bazman ( 4849 ) on Sunday August 31, 2008 @03:44AM (#24817079) Journal

      Because it's cheaper?

      Over here in the UK some companies give you a discount on your account if you pay by Direct Debit (basically an instruction to your bank to give the company whatever they ask for each month). I say 'discount', of course it's really an extra fee for doing the work yourself. If you pay online with a card you pay extra. I think for my phone company it's an extra GBP4 per quarter.

      Companies over here love Direct Debits. Every bill comes with a 'why not pay by Direct Debit?' leaflet. Sadly there's no tick box for "I really don't trust you". Stories of epic fails with DDs are legion - an extra zero on the bill makes the person go overdrawn, they get a bad credit record, they lose their house, they kill all their family and so on. I exaggerate. Slightly.

      Sometimes I feel I'm the only one not paying by DD, but that's what they want me to feel...

      • Re: (Score:3, Informative)

        by Skal Tura ( 595728 )

        Because it's cheaper?

        Over here in the UK some companies give you a discount on your account if you pay by Direct Debit (basically an instruction to your bank to give the company whatever they ask for each month). I say 'discount', of course it's really an extra fee for doing the work yourself. If you pay online with a card you pay extra. I think for my phone company it's an extra GBP4 per quarter.

        Companies over here love Direct Debits. Every bill comes with a 'why not pay by Direct Debit?' leaflet. Sadly there's no tick box for "I really don't trust you". Stories of epic fails with DDs are legion - an extra zero on the bill makes the person go overdrawn, they get a bad credit record, they lose their house, they kill all their family and so on. I exaggerate. Slightly.

        Sometimes I feel I'm the only one not paying by DD, but that's what they want me to feel...

        I think there should be a middle road, so that the bills get automatically posted to your bank account, and automatically paid upto X amount with an confirmation email sent automatically to your inbox.

        Those exceeding the amount you could manually go and approve, or if you wish, manually approve every single one. Easier and safer.

        Here in Finland, Direct Debit is rarely used infact, and nothing really happens if you cannot afford the invoice, in the past they tried 4 times on 1 day intervals, each time accrue

        • by xaxa ( 988988 )

          Here in Finland, Direct Debit is rarely used infact, and nothing really happens if you cannot afford the invoice, in the past they tried 4 times on 1 day intervals, each time accrued 2.8euros extra charges.

          In the UK, the equivalent charges are more like £28. There is currently a test case going through the high court (or something) on whether this is fair, and it's unlikely the banks will win. Then they'll have to refund all the money! But we do get free banking here, so effectively disorganised people pay for everyone's banking with the high charges -- but having been charged a couple of times I think paying a little for the account would be preferable.

      • by Inda ( 580031 )
        5% cheaper in most cases.

        Once again I'm amazed at the backward nature of our friends across the water. I thought their issues with mobile phone payments was bad enough...

        The thing I like about Direct Debit is I don't have to worry about bills. I can budget easily, there are no monthly shocks, I know exactly how much is coming out my account on the 24th of each month.

        I know some people in the UK moan (moan in the UK? Surely not?), moan about the utility companies at year end when they are in credit. A simple
      • by julesh ( 229690 )

        Stories of epic fails with DDs are legion - an extra zero on the bill makes the person go overdrawn, they get a bad credit record, they lose their house, they kill all their family and so on. I exaggerate. Slightly.

        You do know that if an incorrect direct debit makes you go overdrawn, all you have to do is tell your bank and they will refund it to you, along with any charges/interest that occurred because of it, and correct any incorrect information that has been placed on your credit record, don't you? All

    • not all banks offer that type of online banking. That is the trouble. Of the two Credit Unions I would use in my town (that don't rob you blind like the banks) My bank doesn't offer true online banking, and the other offers only "mail a check".

      Issue's I've seen:
      Some bank's "online" is merely putting thru and ACH electronic check when you suggest. Some are better than others but they almost always want to wire the money on THEIR terms so they can float the transit.

      The companies that want you to give them y

    • Re: (Score:3, Insightful)

      by b4upoo ( 166390 )

      Cost is the real issue. Mailing letters is an expense and every now and then mail gets lost or stolen. With an electronic transfer there may be no cost at all and you save time every month.
      For those that are really worried it is easy enough to set up two bank accounts such that one transfers just enough money from one account to the other to pay for the monthly transfers. That way the account with the big money is not exposed to anyone but yourself. And you c

    • Because, if you have to pay rent, utility bill, phone bill, internet bill, health insurance, and car insurance, you're already up to an hour of time you could have saved. Since I live in a country where automated bill payment is the norm and rarely goes wrong, I'd rather have my extra hour. If I lived in the States, I would think twice about that, though. But then again, that's one of the reasons I don't want to live in the States.

  • One-Time Payment (Score:4, Insightful)

    by Bardez ( 915334 ) on Sunday August 31, 2008 @03:26AM (#24816999) Homepage
    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.
    • About 10 or 12 years ago when I was living in Australia I used to pay absolutely every single bill by visa debit card on line (No possibility of overdrawing, no money, no pay). Electricity, water, gas, telephone, shopping, take out, etc.

      They did have a system you could set up to do it automatically back then too, though given that all of these pay on line services only took perhaps no more than 2 minutes to actually complete, I never saw the point. You could also pay by phone in much the same way, dial up t

  • I can pay bills through the American Express credit card management site. I'm really not too worried, as I can always dispute charges on my credit cards- happened once and it was all sorted out in about half an hour. I also keep a low credit limit on my cards, so if there's any damage financially it's minimal.

  • Direct debit (Score:5, Informative)

    by BorgDrone ( 64343 ) on Sunday August 31, 2008 @03:37AM (#24817047) Homepage

    Over here (the netherlands) lots of people use direct debit. It's safe and convenient and it doesn't give anyone unlimited access to anything. If you give permission for a regular direct debit to a company you can at any time cancel this with your bank, you can also undo an automatic withdrawal (within a timeframe of 2 weeks after the withdrawal iirc), no questions asked.

    Also, people rarely use creditcards here, everyone uses direct debit cards, which are secured with a PIN code. Cheques are not used any more. If you need to transfer some money to someone you usually transfer it directly from your account to theirs.

    • by cuby ( 832037 )
      Yes, that's true. This behaviour is common to almost all Europe.

      I never really activated direct debit because I want to have the real perception of all the costs I have. I take 15 minutes every month to pay all the bills online, that's not much.

      Moreover, back in collage I worked in a call center of a major utility when they introduced direct debit, it was a major improvement to consumers. Before that, banks had full access to the accounts and I remember some of them were CLEANED by bill mistakes. No n
    • Re:Direct debit (Score:4, Informative)

      by Teun ( 17872 ) on Sunday August 31, 2008 @04:55AM (#24817509) Homepage
      I can second that, as a matter of fact in most Western European countries it's the bank that protects you against wrongful withdrawals, similar to what a credit card company can do but much cheaper.

      Here in The Netherlands it's mainly the cable company UPC that gets in the news for continuing monthly withdrawals after cancellation of a contract but the banks sort these problems without cost for the individual.

      Last month it was thirty years ago I got a credit card because I experienced the hard way it was a necessity for international travel. To get it (from American Express) my bank needed to mediate and I was the first person with one for this local branch.

      Even then it was the normal thing to do to (fully) pay the credit card off every month by Direct Debit.

      I have never had any interest payments due to a credit card company because of this system, after all, when needed, a bank loan is much cheaper than a CC overdraw.

      In the present age even the credit card is not needed any more, virtually anywhere in the world I can use my bank's debit card to get cash as they are associated with Maestro.

      Cheques are generally not used in The Netherlands as they are not guaranteed and you have to wait up to 14 days to get your money, it is only from the UK or the US that you sometimes see these expensive, worthless and outmoded things coming in, the IBAN system is much more efficient.

      • I'm not sure exactly why; I just learned recently that it was an exception, along with US-UK, internationally.
        Other than that, everything said applies here, too.
        I can chime in with a few informations on how automated debit works, having briefed by a banker I know. First of all, not every company can apply, and there's a vetting process before the priviledge is granted to a creditor. A background check is done on the executives, I believe.
        Then, most importantly, the priviledge can be revoked at any time if t

    • is one of those European countries where direct debit is used a lot. I find it a quite convenient process, and it is reasonably safe too:
      The undo timeframe BorgDrone mentioned is 6 weeks according to the banks, and according to all accounts it works without problems in that timeframe. But if the 6 weeks are binding for you is legally unclear, court decisions are mixed. So you might have a chance to undo the debit even after 6 weeks, albeit with more hassle (going to court).

  • Common practice (Score:5, Informative)

    by jasticE ( 196565 ) on Sunday August 31, 2008 @03:42AM (#24817067)

    This has been common practice in Germany for as long as I remember (or live). If you do notice an illegitimate transfer, you can tell the bank to undo it, at which point it is up to the company again to bug you about the money. I think all in all, it's less hassle to just check whether all deductions are legit than to manually transfer money to your billers.

  • Verizon (Score:5, Informative)

    by Anachragnome ( 1008495 ) on Sunday August 31, 2008 @03:46AM (#24817093)

    I had to CLOSE a bank account to keep Verizon out of it. They first drew more then I owed them from it, then after I told them I wanted paper bills that I would pay myself(they also tried to charge me for the bills), and to not auto-pay anymore, they promptly attempted to draw the same amount, found they had no access to it and charged me an insufficient funds charge. I believe that was entirely intentional.

    That was enough for me. Nobody has access to any of my accounts but myself. Not even my wife. That way when I have a charge to my account, I can ask to see my signature on something specifically authorizing it. No signature? Not my problem.

    The hassle of dealing with idiots like that FAR outweighs the convenience of auto-pay.

    • by Skapare ( 16644 )

      My father received an offer from Verizon to sign up for a plan than included flat-fee long distance. He decided to sign up. They gave him a date when it would be activated (for some reason they couldn't just click a button on the account and change it on the fly). So the date comes and passes. I was there at the time and wanted to do some long distance dialup access overnight (he didn't have broadband), so I called Verizon to check and they confirmed his account was indeed on the plan now. So I did the

    • Re:Verizon (Score:5, Insightful)

      by ColaMan ( 37550 ) on Sunday August 31, 2008 @05:24AM (#24817681) Journal

      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?

    • Re: (Score:2, Interesting)

      by Aerynvala ( 1109505 )
      My sister had a similar problem with Verizon, actually. Only closing the account didn't solve it because her credit union re-opened the damn account when Verizon tried to get more money out of it. I don't recall how it was resolved, but it was a huge mess that took months to sort.
  • I don't (Score:4, Insightful)

    by mosb1000 ( 710161 ) <> on Sunday August 31, 2008 @03:53AM (#24817131)

    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.

  • Well (Score:3, Informative)

    by mikkelm ( 1000451 ) on Sunday August 31, 2008 @03:54AM (#24817145)

    I'm using automated payment [].

    To be honest, I don't see what the fuss is about. If I see a charge I don't agree with, I have it reversed, and confront the billing party, though that's yet to happen. I don't see how anything short of a good portion of cynicism could keep people from using this. I haven't done anything to pay any utility, telco or ISP bill for over a year. Even my rent is handled automatically. Saves me a lot of trouble.

    • Re: (Score:3, Informative)

      by Grave ( 8234 )

      It's not as easy here in the US to have a charge reversed, and if that charge causes you an overdraft fee, you can be really left out to dry in the meantime.

      • Re:Well (Score:4, Insightful)

        by mikkelm ( 1000451 ) on Sunday August 31, 2008 @04:33AM (#24817401)

        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.

  • by Anonymous Coward

    Since I moved out of the US, I have paid all my bills online. Outdated methods of paying bills with paper checks do not exist here, like in the US. I've been paying bills online for years now and have never even once had a single issue. And I've never heard of anyone having problems here either, outside of single time when a fake bank website was set up and caught a few people. Anyone with even a remote knowledge of the web would have known it was a fake site though and it was shut down pretty quickly.

    I don

  • by RWarrior(fobw) ( 448405 ) * on Sunday August 31, 2008 @04:01AM (#24817201)

    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.

    • Re: (Score:3, Insightful)

      by isorox ( 205688 )

      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.

      What kind of a fucked up country do you live in?

  • by HomerJ ( 11142 ) on Sunday August 31, 2008 @04:02AM (#24817207)

    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.

  • by fortunato ( 106228 ) on Sunday August 31, 2008 @04:12AM (#24817263)

    My favorite part, if you've RTFA to the very end, is this:

    UPDATE In last weeks column on socially responsible investing, I mentioned an exchange-traded fund called the HealthShares Emerging Cancer Fund. What I failed to notice, because the company hadnt bothered informing potential investors on the funds own home page, was that the day before my deadline the company announced it was shutting down the fund in September.

    Now here is someone you should definitely listen to.

    • by julesh ( 229690 )

      My favorite part, if you've RTFA to the very end[...]

      I wish I could. But NYT seems to have deleted my account with them (the username and password from my autologin aren't working any more) and when I try to register again I get a page that says "Please check the highlighted areas below" and then shows a form field that is correctly filled in. :(

  • 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.

    • by sydbarrett74 ( 74307 ) <> on Sunday August 31, 2008 @04:24AM (#24817355)
      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.
      • That's the point. OP was engaging in what is called a rhetorical style in conveying his narrative tale.

        More troubling than your failure to grasp that, though, is that damned buggy-whip example. Is it a shibboleth for some underground Slashdot group? Because it's not like there was ever a large buggy-whip industry in the first place. As a tale of adaptation, it's lacking. And somehow, no one uses it to talk about American programmers adapting to outsourcing by finding another job or lowering their salar

  • by LoadWB ( 592248 ) on Sunday August 31, 2008 @04:22AM (#24817339) Journal

    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.

  • by atomico ( 162710 ) <miguel DOT cardo AT gmail DOT com> on Sunday August 31, 2008 @04:23AM (#24817345) Homepage

    It might be of some help to know how is it handled in other countries...
    Where I live (Spain), direct debit has been the rule since long ago: almost everybody does it this way. Utilities (electricity, telephony, gas, mobile phone), insurance, mortgage, all charge your bank account monthly or bimonthly. It is convenient (especially for them) and problems are not too common, although they exist. But then you can dispute the charges or go to the consumer protection office.
    Banks try to push you to do it this way: most of them only let you pay your bills only one hour per day (for example, from 10 am to 11 am only).

    My personal take on all this: I like it this way. As I said before, problems are rare; it is far more usual to know someone that has had his credit card number stolen than to know a case of having trouble with direct debit. And to have something less to care about is worth it. Anyway, most of the time the bill gets to you by mail two or three weeks before the charge is made, so you can check it and have some time to fix the problems (good luck with that though).
    Overdrafts are allowed, but they are easy to avoid. Actually, banks like so much this system that they will equate having this kind of automated bill payment with being a regular, good customer: in most "fidelization" promotions, they ask you to have two or three bills paid through them.

  • If only 38 of every 100,000 people fall victim to this sort of mistake, I suspect that I'm more likely to fall victim to a car accident than this. It figures that some people might freak out at any suggestion that they give up even the slightest degree of personal control (read: micromanagement).

    I use my Bank's automated bill payment system. I lose some small degree of control, but in fact that is indeed the entire point of the exercise, n'est-ce pas? I don't want that monthly control of those bills nor

  • I use -- completely free, no monthly fee like a lot of those consolidated bill payment services. My only complaint in five years of using them is that more companies don't offer payment through it.
  • I work in the auto payment insdustry. The number of errors are small but they do exist. Sometimes someone submits the same batch twice or the account numbers get converted into floating point and back.

    Remember that if you give a company your credit card number and they screw up, they take a banks money. If they screw up with direct debt, they take your money.

  • Is this not something that is done by default in the USofA?

    In Belgium this is very standard practice. Especially for fixed amounts, like your provider or electricity. It is also done with varable bills, like your credit card. In the Netherlands, you can even give somebody an allowed one time to do this for purchases over the phone. Something that is not possible i Belgium.

    Stopping this is done almost immidiate and I yet have to hear about big problems. Smaller problems exist, but those get payed back almost

  • I receive most of my bills electronically at my bank - but they don't take the money out of my account. I review the bill and I schedule the (single) payment electronically. I can also electronically send checks to billers who don't support online billing and/or payments.

    So basically it's just like the old system (paper bills and paper checks), but online. The control over making the payments is still in my hands, not the billers.

    Why would you give these guys the ability to pull money out of your account at

  • I use the automated payment system of handwriting checks that have carbonless copies for my records, stuffing them into envelopes along with the stub from the bill, sticking a postage stamp and a return address stamp on the envelope, and popping that whole darn thing into a mailbox. Automated payments are so "convenient" but handwritten cheques are the only way to go.
  • BPay (Score:3, Interesting)

    by LordLucless ( 582312 ) on Sunday August 31, 2008 @05:44AM (#24817783)
    Australia has a system called BPay, which has been almost universally adopted across banks, and most large billers. It comes in two parts:

    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.
  • by Kupfernigk ( 1190345 ) on Sunday August 31, 2008 @05:47AM (#24817797)
    Speaking as someone who has been a local director of a US corporation and then a general manager in a company with a US subsidiary, the biggest issues are simply that US banks are technically backward compared to Europe, and that you have no Data Protection Act.

    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.

    • by Peeteriz ( 821290 ) on Sunday August 31, 2008 @06:42AM (#24818091)

      And the reasons for the European situation are not because EU banks behave better - it's because of heavy-handed intervention from the governments to protect consumers.

      All these benefits of EU Direct Debit system(s) that make it good for the customer (instantly reverse payments weeks after they have been debited, authorisation requirements, fee and float limits) are not due to goodwill, but due to requirements set by initiatives such as EU Payment Service Directive and SEPA. The situation would me much more in favor of the billing companies' and bank fee-income (like in USA) if it were driven purely by free market.

  • In the USofA, EVERY other entity involved in any sort of automatic debit is out to pillage your account, totally disregarding actual amounts due and due dates. The banks, in particular, are doing everything that they can to generate fees for overdrafts, so they refuse to provide any protection for bizarre debits. Payments may be disputed, but resolution takes months.

    The "free" services are making money from the "float" and may, or may not, make the payment on time, and you have no recourse for the late fe

  • Not...

    Here we are, in 'old Europe', having done away with checks in the late 80s, credit cards were really never that popular (I've never paid a single bill with it) and we're used to full electronic banking since the mid 90s. In the Netherlands we have had direct deposit and direct debit for ages.

    So, yes, you can set it up so that any company can take whatever it feels you owe them and yes, it only takes one call to the bank to reverse it.

    But I've decided against it.


    Since I can't tell my employer to le

  • by Jay L ( 74152 ) * <jay+slash&jay,fm> on Sunday August 31, 2008 @08:00AM (#24818459) Homepage

    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.

  • by v1 ( 525388 ) on Sunday August 31, 2008 @08:39AM (#24818649) Homepage Journal

    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.

"Conversion, fastidious Goddess, loves blood better than brick, and feasts most subtly on the human will." -- Virginia Woolf, "Mrs. Dalloway"