@Spiderman: Thank you. Always great to get the unvarnished inside story.
Years ago my wife took a minor side gig as a paid employee for a sorta-shady operator. No way in heck were we going to sign his direct deposit agreement connecting him to our primary checking account through which flowed all our routine money.
So we opened a separate checking account at a different bank to receive her direct deposit paychecks. Which payments we promptly vacuumed out into our real account. We never had him try anything, but he’d stiffed enough other creditors that retracting some payroll checks would have been right up his alley.
These seemed like the minimal sensible precautions. As to my employer and her main employer we had no concern they’d do anything bad; mistaken maybe, but not bad.
To this day all my e-payments are push from my end. If somebody wants to debit a variable amount, they can debit my credit card, not my checking account.
True but there is loads and loads and loads of fraud in the system. The threat of jail doesn’t stop people when there is money to be scammed and there is a lot of money here to be scammed.
I agree but my sense of things is it is harder these days to hold banks accountable and get your money back. Maybe you can but it will take effort and time. And maybe you just can’t.
IIRC I was told debit cards are worse to use than credit cards because you have less recourse in getting money back from a bogus transaction when it was done via a debit card.
The point is that when there is a problem the people who lose money find passable ways to fix the problem. Setting up a business and then scooping money out of others’ accounts is a difficult thing to accomplish given the hurdles a business needs to go through to prove they are reliable. Same reason very few people rob banks by going in, getting a loan, and then running off and not paying it back - it’s hard to fake the eligibility criteria.
I recently closed down a bank account for an LLC where I’d been partners with my sister. I was entitled to the final funds in the account and had them sent to myself as a check.
No dice. The check was made out to the business (now closed), not to me. So I went into the bank to take care of it.
They couldn’t do it either. According to their rules, I could not initiate a transfer to my own personal account. I could have done it with my sister’s authorization, but she lives across the country and it would have taken time to organize.
The workaround was that I could authorize a transfer to my sister’s bank account (all three were at the same bank). And then I could get the money from her. That’s what I did and it all worked out.
I guess they want to stop the case where one partner cleans out the business’ coffers by transferring it all to their own account. Transferring to the other partner isn’t seen as a risk. Still a bit weird.
Yes, there are plenty of people doing life sentences on the installment plan, it seems. (6 months here, a year there…)
Even more so, credit card companies promise to refund the transaction if the goods/service promised are not delivered - and it has been a common tactic for getting a refund when a company suddenly goes bankrupt. (Whereas with debit - well, sux to be you) As I understand, credit card companies are fairly agreeable to this because often they don’t forward the transaction amounts for a few weeks so perhaps many of the transactions will not have been paid to the now bankrupt merchant anyway.
i use credit when I can, except with smaller merchants, because with the judicious use of billing cycle cut-offs and paying off the full balance, I essentially get an interest-free loan for a month or more.
Many different opinions here, some because different rules apply in different countries.
I believe that setting up a direct debit from a credit card is not a good idea. (Actually, regular payments on a credit card are called a Continuous Payment Authority (CPA),)
The major difference is that a CPA is a ‘pull’ payment so the payee can and will carry on taking the payment until they cancel it. Of course, most payees will cancel on request but might take their own sweet time about it and take an extra payment.
Another problem is that even if you cancel the card, they will keep taking the money until you tell them to switch. DDs from a current account will move with the account, even if you switch banks.
Thanks so much Spiderman! That was a great post and it’s the kind of thing that makes Straight Dope such a great resource. At least I have a better sense of how this works.
I just saw this article about Tesla double-charging for cars.
I don’t know which bank is Tesla’s ODFI, and I don’t know whether they use a payment processor of some kind that intervenes here, and some of this might be credit card payments but it sounds like there could be a lot of reversed ACH payments. Perhaps more than 1/2% of this month’s debits by the ODFI if this affects a lot of Tesla buyers. I don’t doubt that these buyers will get their money back from Tesla eventually but it could be incredibly disruptive for them in the meantime. Do you think there will be any particular repercussions for Tesla or the ODFI in this case?
The snarky answer is it’s hard to feel sorry for people who have an extra Tesla’s worth of cash sitting in their account.
But the point would be, this could happen with any company that has an authorization to pull a transfer, whether it’s Tesla or the Texas power companies, or some random company. Whether this will cause problems for that company in the future I guess depends on their relationship with their bank and the explanation for the problem.
Interesting in the article is “ask your bank to reverse the transaction”. Is this something the bank can actually do for someone who feels the transaction was not correct?
Similarly, for the OP’s concern, these were (alleged) errors from an established business. Unless it’s a case where someone takes over and existing business and then pulls a heist this way, it’s unlikely that someone could randomly “clean out your account” or worse yet, get away with it.
But yes, the ability to pull out your actual funds is different from the ability to create a credit card charge which you can then dispute before you pay. The former is far more inconveniencing.
Wires are (virtually) immediate but are very expensive. ACH is much less expensive but takes longer; typically a day or two. My GUESS is that either someone in accounting manually or was miscoded systemically when they looked later that day/next morning & the funds weren’t there they initiated another ACH. Eventually they both processed (assuming sufficient funds in the buyer’s account). If not the buyer was probably hit for a much smaller NSF charge from their bank. Human error/quick fix once pointed out. Just like the three-strikes rules for felons who don’t get a life sentence for their first felony conviction, I doubt their bank will toss them out for this; especially if it only happened for a period of days, which means their ‘Unauthorized’ returns won’t be that high for the whole month.
A one-time error (even if it’s a lot of accounts over a period of days - that’s just a one time procedure/programming error) that is quickly rectified is going to be looked at with more leniency than a company that routinely & regularly has issues.
As for your second question that probably is the best way to go. Tesla could (possibly - depending upon ACH IT programming capabilities, a lot of places can’t do this) do a reversing txn; however, you as a consumer could initiate an ‘unauthorized txn return process’ with your bank. If those two cross, Tesla gives you your money back for one & gets it taken back for the other, you’d get both debits back & have a new car. No, it’s not right for you to keep both but it happens & the only thing they can do is come after you criminally &/or civilly.
BTW, ‘up to 10 business days’ is standard Reg E language; that doesn’t mean it will take that long & it frequently/usually doesn’t. Ever see this language on your annual disclosure notice on your bank account or credit card statement: We will determine whether an error occurred within ten (10) business days after we hear from you and will correct any error promptly. If we need more time, however, we may take up to forty five (45) days to investigate your complaint or question. If we decide to do this, we will credit your account within ten (10) business days for the amount you think is in error, so that you will have the use of the money during the
time it takes us to complete our investigation. If we ask you to put your complaint or question in writing and we do not receive it within ten (10) business days, we may not credit your account.
Funny thing that occurred that bears out what the OP asks:
A fairly long article, the gist of which is that using less than obvious pop-up boxes with pre-checked options, people who thought they were making a one-time donation to the Trump campaign last year ended up making double and then weekly donations, and more…
This happened with either bank accounts and credit cards. The fallout was the Trump campaign ended up refunding over $120M to people who felt they had been misled (charitable interpretation). After the election, refunds were made from the funds donated to “Fight the Steal”.
I suppose that unlike the OP’s question, yes the donors did initially give the information to the company WinRed managing donations, so it was not outright thievery. It was just a “misunderstanding” that donors hadn’t noticed popup boxes with checked options, including some that popped up after they’d entered their donation amount. Technically the company was authorized. After all, to suck money out of people’s accounts without authorization would be dishonest.
But to stay on topic, it does demonstrate what can be done with such information.