Paying online can weave a web of problems

The Baltimore Sun

My friends tell me it's quick and painless. They say doing it makes life feel so much easier. They also swear that once you start, you won't be able to live without it.

It sounds so enticing. But I still refuse to bank online or pay my bills online.

I do feel like an oddball whenever I sit down a couple times a month to write checks. I still lick the envelopes, press a stamp on each and then walk all of it to a mailbox or post office that I trust to get my bills where they need to go, on time.

Scoff if you will, but I'm not really sure it's more secure to click a few buttons on a computer to digitally send a payment in bits to some numerical account somewhere.

It's not that I haven't seen the writing on the wall. A recent report from the Federal Reserve showed that more than two-thirds of noncash payments are now done electronically. Studies have shown that the chances of someone stealing my data online are no greater than the chances of someone swiping my mail. I know most banks use some sort of encryption and cryptography to safeguard my transactions. I know online banking scored 82 out of 100 on the University of Michigan's American Customer Satisfaction Index this year. And, yes, I would likely save some money since I wouldn't have to buy stamps anymore.

And yet, I'm still leery about taking the electronic plunge.

Why? Because once every couple of weeks, I hear from someone I know or get a call or e-mail from someone like Laurie Hansen who scares the bejesus out of me about how some company withdrew two electronic payments in one month or how a payment never made it to a designated recipient. And don't even get me started about automatic bill pay, which is the equivalent of giving someone else license to steal straight out of my bank account whenever they want.

In Hansen's case, the 46-year-old Catonsville lawyer signed up for online bill payment in 2003 when she bought her Dodge Durango. Her online payments to Chrysler were trouble-free for five years until last February and March, when she discovered that two $460 payments didn't make it. It was sent to some mortgage company.

Stories like that make me cringe.

The fact of the matter is I'm a bit of a control freak about paying my bills. I don't like relying on anyone - be it my bank or the company I owe money to - to make sure I pay a bill on time.

When I write a check and mail it, I know I've done all I can to make sure my bill gets paid. When I click a button, I'm relying on my bank to make sure that transaction goes through on time. What if the system crashes and my payment does not get sent? What if my bank sends two payments instead of one to my mortgage company?

I'd get whacked with late fees and overage penalties, which would ding my credit, and bad credit would make my interest rates go up, high interest rates would make it harder for me to pay my bills, and before you know it, my dog and I would end up living on a bench in Patterson Park.

OK, I exaggerate. But only a little.

In Hansen's dilemma, butterfingers did her in. Someone typed in some wrong keys, and her money was sent to some company she didn't owe money to.

"When I signed up for online bill payment, I didn't have to type in an address," Hansen said. "Bank of America said it already had a relationship with Chrysler Financial, so all I had to do was fill in my account number. Things went fine until my payments went missing. When I called Chrysler, they told me they changed their billing address recently.

"When Bank of America went back to look at what happened, they found that an incorrect ZIP code was entered from their merchant list. It resulted in my money being sent to the wrong company. The biggest problem for me was not knowing when they would put my money back."

Hansen said one customer service rep told her it would take three to five days to resolve the case, another said five to seven, and a third told her seven to 10 days. Banks have 10 days to conduct an investigation, and if they can't come up with a determination in your case, they must provide you with a provisional credit, according to Craig Stone, deputy ombudsman for customer assistance for the Office of the Comptroller of the Currency, which regulates all national banks.

Bank of America declined to comment on Hansen's personal account because of privacy concerns, but spokesman Tara Burke said, "We capture payments by using P.O. boxes and ZIP codes. You have to enter both correctly in order for the payment to go through accurately. If one is wrong, the payment can be diverted to the wrong place." But, in any case, Burke said, "If a mistake or a late payment is made on our end, our customers are protected under zero percent liability guarantee."

True, but it could still take 10 days to correct the problem. That's a long time for some people living from paycheck to paycheck.

Whether it was Hansen's fault, the bank's fault or both, the whole situation was resolved in one day after Hansen called the OCC, which put her in touch with Bank of America's executive office. The $920 owed to her was placed back into her account on April 1 - less than 10 business days after she called the bank on March 19.

"If someone had explained to me that the money would be returned in 10 days, I would have felt a lot better," Hansen said. "I'm definitely going to pay closer attention to everything in the future and double-check that my payments are going through. I've only ever had one other problem come up in the eight years that I've been using it. I use online bill paying all the time, so I'm not sure I could live without it now."

I remain unconvinced.

dan.thanh.dang@baltsun.com

TIPS FOR ONLINE BANKING

Online bill pay gives you less incentive to check your statements. Paying your bills in autopilot mode without checking your statements could result in a late payment or missing a charge billed to you by mistake.

Check on service fees. Inquire with your bank and the company you're making payments to about how much it costs to pay bills online before you sign up.

Pay close attention to transactions, and notify the bank of any discrepancies within two statement cycles or 60 days.

If you use automatic bill pay, consider using your credit card instead of a bank account so that you can dispute problems easily. A credit card will credit the disputed amount back to your card immediately while it investigates; the bank has 10 days to investigate before crediting you back.

If you use a credit card to automatically pay bills, don't let the balance accumulate, or you'll end up paying more in the long run for interest on your rent, utility and other bills.

Skip automatic payment for bills that you must verify each month, such as credit card and phone bills.

Keep in mind that the federal Electronic Funds Transfer Act gives you the right to stop an automatic transaction within three days' written or oral notice. Contact your bank, which could require written notice within 14 days.

If your problem is not resolved, contact the Office of the Comptroller of the Currency toll free at (800) 613-6743 from 8 a.m. to 8 p.m. on the East Coast. The OCC will contact the bank to help resolve complaints.

Double-check addresses, accounts and payment figures that you type in. Most errors originate from the customer, OCC says. As with a bill you might mail off, once you click send, it's gone, and getting the money back can be difficult.

Source: Office of the Comptroller of the Currency and Bankrate.com

ONLINE

Find Dan Thanh Dang's column archive at baltimoresun.com/consuming

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