Check Debit Madness

May 7, 2008 9:42 AM

Our bank account was debited for a check issued by a different bank. What in tarnation?

I gave my doctor a $20 check issued from my Small Town Bank account, check number 1234.

My Small Town Bank website informs me that we were debited for $57, allegedly from check #1234. When I click to view the image of the check, it shows a check from someone else's Chase bank account! The name is different, the routing number is different, the bank is different, the account number is different, the check number is different, the amount is different. The only connection is that both checks were payable to the same doctor.

The money is being refunded. Our Small Town Bank advisor said she'd never seen anything like it in twenty years, and blamed my doctor's bank (but was unable to reveal which bank that was). I'm just glad this other person didn't get a $10,000 hip replacement.

So how did this happen and who's to blame?

This is in the USA.

posted by East Manitoba Regional Junior Kabaddi Champion '94 to work & money (13 comments total)

By the way, the image of the Chase check doesn't have the check's value printed in machine-readable font in the bottom-right corner. Apparently it should have that.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 9:53 AM on May 7

CHANCE: Bank error in your favor. Collect $37.

Read about how the ACH works. Sounds like an error in data entry occurred somewhere along the line.
posted by ikkyu2 at 10:10 AM on May 7

The bank that ran the "wrong" check in this instance will have stamped the back. They are required by law to show that they ran the check - their routing number will be on it, and you can figure it out that way. If I had to guess, and this is just a guess, I would posit that there was a problem running the chase check - bad magnetic ink or whatever - and it had to be hand encoded. Becuase it was next to your check in the pile, the information was switched by the person entering the data.

The additional wrinkle is that the info was not necessarily entered by a person at the bank. Whomever your doctor banks with may offer a cash management/banking arrangement to small businesses that allows the business to scan checks in for deposit, which means that it's at least moderately likely that someone at the office was entering the data and made the mistake. But, regardless, i would think it boils down to a data entry error. Not that I want to see a random check image, but with the image I could maybe tell you more.

If you are seeing a phsycial check, you were not ACH'd for the money. It would have been processed using Check 21, which is a different beast altogether.

I no longer work in finance, but I used to, FWIW.
posted by Medieval Maven at 10:14 AM on May 7

Thanks Medieval Maven. I've sent you the image.

The only 9-digit code on the back has an "S:" in front of it, and it starts with "00". If it's a routing number, Wikipedia says it indicates the US Government. Is that possible?
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 10:30 AM on May 7

For the record, Medieval Maven responded with:

wow, there is nearly nothing on the back of that check. If you scroll down here you can see what a substitute check would look like under check 21,but if you look at the back of the check in the example, it has all this machine stamping on the back of it, which is more like what I would expect to see. generally whatever bank gets the check first will do all the stamping and converting to electronic and so forth. The point of the stamping is so that you and your bank know what bank ran the check so that if it's (for example) fraudulent, you can go back to the depositing bank and get it fixed. I've literally never seen a check so bare.

In any case, now I would really lean toward the in-house cash management scenario at the dr's office, since they would be scanning the originals in for their bank and sending that information. Sorry I can't be more helpful!

which is nice.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 10:42 AM on May 7

So if I'm getting this straight, we now have a system where even with oldskool paper checks, everyone's relying on the seller to provide accurate information, and no-one at either the debited bank or the credited bank checks the data at any point before paying out. Is that right? That sounds pretty unfortunate if that's right.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 12:21 PM on May 7

I had something like this happen not too long ago. Like you, I could view an image of the check debited against my account and it was clearly not my check. My bank blamed the scanning of the routing number on the bottom of the check for the error and, like your bank, claimed they'd never seen anything like it.
posted by maurice at 12:34 PM on May 7

EMRJKC - someone, in theory, should be checking it, but if you think of volume and then of probability, it won't happen often necessarily, but it will necessarily happen to someone sometimes.
posted by Medieval Maven at 1:31 PM on May 7

This is true!
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 1:35 PM on May 7

I've seen this kind of thing at the bank I work at, but it's not my department to fix, so I don't know the ins and outs. I think in one case it was simply that one check was sitting "high" in the scanner, and the routing and account number from the check behind it was picked up. It was that second account that was debited.

I will tell you that Fiserv, which develops a ton of software and systems for banks, is heavily marketing remote capture now. Merchants can scan the checks from their office and then send the images to the bank. The scanner will automatically read the numbers and convert into files for the bank to send out to the Fed. And many banks are switching to systems where each branch does their own scanning and imaging instead of sending them to a main processing center. It seems to me that the possibility of error will increase as the new systems are tried.
posted by saffry at 3:31 PM on May 7

Follow up: my bank said they would refund the money to me. What they actually did was refund the money to someone with an account in a THIRD bank. Whether that was my doctor's account, I do not know. The clerk also informed me this is the fourth time she's seen this sort of thing happening recently.

Yeah, I don't think I'm going to be letting them handle my money any more.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 8:50 AM on May 16

You still don't have the money back? This has been going on way, way too long.

Write a brief letter to the CEO of the bank, including as much of the following is appropriate. They have debited money from your account without authorization. After their employee agreed and promised to return the money, they have failed to do so two weeks later. You are starting to regard this less as an honest mistake and more as an indication that the bank's business practices and internal controls are fundamentally unsound, and are beginning to suspect this may be a case of fraud. If $37 is not returned within one further week, you will (a) submit a fraud report to the local police, and (b) report the incident to the Office of the Comptroller of the Currency/Office of Thrift Supervision/National Credit Union Authority/state department of banking (only one of these is correct for your bank; comment here if you can't figure out which one), and the FDIC.

If you don't get the money, then do so. In fact, even if you get the money back, it'd still be a good idea to let the government inspectors know what sorts of shenanigans are going on here.

Yeah, I don't think I'm going to be letting them handle my money any more.

An excellent idea. Although I would wait until after this is cleared up to close your account.
posted by grouse at 2:45 AM on May 19

National Credit Union AuthorityAdministration

Sorry.
posted by grouse at 2:46 AM on May 19