Several times recently I’ve set up things online to pay for things directly out of my checking account (paying taxes, for instance). To do so, I’ve needed my checking account number and my bank routing number. All of those numbers are on my checks. So does that mean that anyone to who I write a check could, for instance, pay their taxes out of my checking account?
I had my utilities set up that way and I came to regret it because the phone company can pretty much wipe out your account either by mistake or by a disagreement with you. They took a couple thousand bucks from my account and I finally got them back but it took time and a lot of headaches. I would not do it again. I want to personally authorize every withdrawal. If you authorize a third party to take out money from your account you could find yourself in deep shit. You cannot put a limit on what they can take so if you absolutely have to do it this way I would open a separate account and have only the needed funds. Having to chase the phone company to recover a couple thousand bucks is no fun.
Anyone with access to your routing and account number can access your account through electronic funds transfers. Such use would constitute fraud and you would not be held legally responsible for the charges.
And have it paid via credit card or debit card instead … one that will assume the problem if it should arise so you need not float 2 or 3k in someone else’s mistake until it is resolved.
There are still some huge megacorporations – DTE Energy and Consumers Energy – that are still in the 1800’s and won’t take credit cards for payments or do automatic billing to a credit card. Idiots.
Fraud the OP discusses happened to my business account about two years ago. Didn’t know it until I reviewed the monthly checking account statement. Numerous auto payments were made to one of the big cell phone companies and withdrawn from my account. Bank credited me for the fraud and did a charge back to the credit bank. No charges at all to me and no hassle with the bank. Cell phone company probably ended up eating that one.
So let me see if I have this right.
If someone withdraws from my account (having all the appropriate numbers), and I notify the bank that I did not authorized that withdraw, then the bank reimburses me for the amount of the withdraw?
Similarly, if someone steals one of my checks and forges my signature do I get reimbursed?
Yes, that is exactly my experience. I did not file a police report - perhaps the bank did. There were multiple transactions all to the same cell phone company and the total amount of the fraud was almost $1000. My bank is a small rural Minnesota bank with two offices. YMMV with the “big guys”. I have no idea how they handle a fruadulent signature on a check.
Does your bank have an electronic payment option, perchance?
I bank with Bank of America, and recently started using their e-pay system. Setup simply required me to enter the name and account number of all my utilities and debtors and whatnot. Then when I want to pay the bills, I simply enter how much money gets sent to which service (with an optional “date to send the payment”).
My banking information is thus not going out to other parties, and the debtors can’t suck my account dry, since I specify when and how much they get paid. Seems safer and more convenient than entering your bank account information all over the place.