Is it legal to withdraw online payments without notifying the consumer?

March 25, 2012 11:19 AM

Is it legal for a company to withdraw online payments from my account without notifying me first?

I live in Massachusetts and have monthly online payments set up for my gas bill, which is generally between $10-$20. I usually receive an email notifying me that my invoice is ready to be viewed, and then a later notification informing me that the payment has been processed. Recently I checked my bank account and found that I had been charged close to $300. I received no notification or invoice for this payment, and when I called the company I was informed that my monthly payments were "estimated" and that the large payment was based on the actual meter reading -- which, as far as I can tell from my communication with the company, I was not informed of. Do I have any legal recourse here?

posted by anonymous to law & government (12 answers total)

Do you have the original withdrawal agreement you signed to setup those payments? It'll probably layout the rules under which they're allowed to take out money.
posted by drezdn at 11:26 AM on March 25, 2012 [3 favorites]

Are you disputing the actual meter reading and the bill or just the method of collection? If you really owe them the money, I would ask them for any bank fees incurred because of an overdraft, but otherwise, demanding your money back and then giving it right back to them (or stiffing them) seems like a colossal waste of time.
posted by JohnnyGunn at 11:38 AM on March 25, 2012

Just as a data point, this is a very common way that utilities (when you have the meter at your house) are managed. You pay an estimated amount per month, which is adjusted (either historically or more commonly going forward) based on regular readings.

I'll echo what others have said about checking your original withdrawl agreement. Since you had it as "set it and forget it," I can't imagine they would do it any other way. For this like gas, electic, water, etc., the amount changes every single month (as you noted).

I'd write this up to a lesson learned.
posted by NotMyselfRightNow at 11:57 AM on March 25, 2012 [3 favorites]

The answer to this question is no, unless you told them it was OK. You likely told them it was OK to withdraw money from our account without telling you when you signed up with them, I'd double check that before moving forward.
posted by Blasdelb at 1:22 PM on March 25, 2012

You can certainly appeal the meter reading. Call your gas company's customer service line.

But I don't see what other recourse you would have; you approved automatic bill payment via authorized withdrawals from your bank account, and they withdrew money to pay your bill. The bill was way higher than usual, and you haven't established that it's correct (and perhaps you think it's incorrect), but you authorized them to pay your bill each month, not to pay your bill for some particular amount.

(I also live in Massachusetts; my gas [and electric] provider is NSTAR, and they have been mistaken on our meter readings, but were quick to re-check and issue us a refund once they confirmed the error.)
posted by Sidhedevil at 1:25 PM on March 25, 2012

The company has no doubt included on the forms you signed, and on its web site, notice to customers that billings are sometimes sent based on estimated rather than actual usage. My supplier has an "E" notation to tell me when the figures it used are estimates.

The big hit has no doubt disrupted your household budget, but the fact is that you used the gas and you have to pay for it. That means there is no legal basis for challenging the charge.
posted by yclipse at 2:03 PM on March 25, 2012

When making e-payments on recurring bills, unless you see the magic words "one-time authorization" you should pretty much assume that the company's going to use what information they have on file for you to try to get money out of you whenever they think you owe it, and plan accordingly.
posted by radwolf76 at 2:21 PM on March 25, 2012

That means there is no legal basis for challenging the charge.

You can always ask for a review and reassessment of a meter reading in Massachusetts. It may well be that the reading was accurate, but if it was off from the estimated by that much--in a winter when our gas bill has been less than half of its usual--something might be awry.
posted by Sidhedevil at 2:46 PM on March 25, 2012

There are several things I pay with regular on-line payments and don't receive notification for...so, to answer that part of your question: yes, if you have agreed to automatic withdrawals from your account it is legal to make them without any further kind of notification (which is also why I don't have my utilities set up this way, although I do pay them on-line as one-time payments). However, it is certainly annoying in this case if you normally do receive the notification, and especially since it is a much larger than normal withdrawal. Annoying, but I doubt you have legal recourse.
posted by freejinn at 5:14 PM on March 25, 2012

Yes, as freejinn says, I have a number of automatic payments that go through every month, and they just go through, without notification. They do also email the bills to me, but just for my records, not as a warning that a payment is about to be processed.
posted by looli at 8:08 PM on March 25, 2012

They do also email the bills to me, but just for my records, not as a warning that a payment is about to be processed.

Whereas my gas and electricity companies email the bills to me as actual notification and they're not allowed to take the money until they've done so (I get 14 days notice). Not because of any legal thing, but because that is what our contract says they will do. So check your contract. That's where the terms of your payment are laid out and that is what is relevant here.

Part of the reason why I get this notification is so that if it's an estimated reading I can contact them with a correct one and get the payment amended, and if it's an actual reading but wrong I can get it re-read. Your company may not bother because, if this one is off, it'll get picked up next time they read it anyway. Still, check your paperwork and go from there.
posted by shelleycat at 12:36 AM on March 26, 2012

A friend of mine in Massachusetts pays her utility bills with automatic withdrawal up to a certain limit to keep from overdrafting on her heating bill in the winter. It's something like, they can withdraw up to $XX, but anything over that they have to bill her for separately. Something like that in the future might help?
posted by Snarl Furillo at 2:18 PM on March 27, 2012