Refund for mistaken bank debits
June 3, 2011 1:48 PM   Subscribe

A big company that directly bills my bank account monthly accidentally deducted an extra $800 monthly (twice so far). Should I expect any compensation beyond my money back?

I got lucky and it didn't result in overdraft fees, and I am a prudent person with money in reserve, so very little harm was done to me. They say all they can do, and all I should expect, is that they return the money in the next couple of weeks. I'm incredulous that this is how it works, as it could easily have gone unnoticed and lost me thousands of dollars, or happened to a less fortunate person and caused havoc in their life. But ideals aside, I would like to know whether I can press them for more or not.

The company in question is a U.S. health insurance provider whom I pay for private health insurance.
posted by SevenSpirits to Work & Money (29 answers total)
if you had no additional fees as a result, why would you expect to be given free money for an error they're correcting?
posted by radiosilents at 1:49 PM on June 3, 2011

Response by poster: Same reason that if I stole $800 from someone's bank account (accidental or otherwise) and only paid it back a few weeks after they noticed it (and never paid it back if they didn't notice it), I would be paying back more than $800. It just seems obvious to me. But, I don't really care about that, just about the question.
posted by SevenSpirits at 1:52 PM on June 3, 2011 [9 favorites]

"In the next couple of weeks" amounts to an interest-free loan, in my opinion. Sixteen hundred dollars is nothing to sneeze at, and one wonders if they make that 'mistake' often.

I'd push and see what they're willing to do for you in terms of discounts or one-time good deals.
posted by Mooski at 1:53 PM on June 3, 2011 [5 favorites]

My bank made an error of similar scope a few years back. Later they sent me a hand-written apology with a fancy ballpoint pen.
posted by exogenous at 1:53 PM on June 3, 2011 [5 favorites]

When you signed up for direct-billing you probably made some agreement to a set of terms and conditions under which they could and could not be held liable for any damages if they over- or under-billed. Of course, since you didn't suffer any damages, I don't see how you could hold them accountable.

On the other hand, there's no harm in asking.
posted by muddgirl at 1:53 PM on June 3, 2011 [1 favorite]

No. You can make a big stink and *maybe* get a discount on your next bill but I wouldn't, uh, bank on it.
posted by DarlingBri at 1:54 PM on June 3, 2011 [1 favorite]

It didn't cost you anything, and I'm pretty sure they didn't magic up your bank account number and get that info themselves, so I am assuming you *gave* it to them at some point and agreed to withdrawals from your account.

No harm, no foul. I'm sure you can end the agreement with them and mail them a check or set up a recurring check mail through a bill pay service that is not your healthcare provider.
posted by iamabot at 1:54 PM on June 3, 2011 [1 favorite]

You could reasonably argue with them for interest lost on that money during the period that they held it, but that's the only tangible damage that you could argue, I'd think.
posted by sillymama at 1:55 PM on June 3, 2011

In my experience, the only thing that stops this is a class action suit, but then I likely didn't hear about any little settlements. If you have a lawyer friend you could ask them.
posted by small_ruminant at 2:03 PM on June 3, 2011

This is one of the reasons to stay away from auto-deduct; it's like letting a stranger put his hand in your wallet. If it's a regular billing, then set yourself a calendar reminder 10 days before the bill is due; else use electronic billing and schedule your bills to arrive together at a certain date of the month.
posted by curiousZ at 2:04 PM on June 3, 2011 [1 favorite]

I agree that you should ask for interest on that money. They took it from your bank account, and moreover, it will take them several weeks to give it back. That is the very definition of fucked up. Three per cent per week is a fair rate, I'd say.
posted by Jon_Evil at 2:06 PM on June 3, 2011

Response by poster: @muddgirl Strangely enough, I didn't. It was set up over the phone, and I didn't have to sign anything. However, I'm not interested in a legal mess, just, as you say, asking.
posted by SevenSpirits at 2:07 PM on June 3, 2011

I had something similar happen (over 10 years ago, though) - it caused me to bounce checks at the time so I asked for and got additional funds for that and then some. Good luck.
posted by cestmoi15 at 2:08 PM on June 3, 2011

I'm not sure it's true you haven't suffered damage. You still have opportunity costs in that the money wasn't available to you and it should have been. I'd consider what your rates are and whether any competitors might be willing to snap up a customer such as yourself. If so, you could express interest in voting with your feet unless they do something to make you happy. Even something like eliminating your co-pay for certain services of items might have a relatively low cost to them but might increase your own satisfaction.

Good luck. This is why I don't do autopay.
posted by Hylas at 2:08 PM on June 3, 2011 [1 favorite]

Best answer: For the future, I would very much suggest that you revoke your authorization to directly bill your bank account. Communicate this to your bank as well. You can then setup an automatic bill payment to pay the same amount every month on the date you choose (if the bill is always the same amount). That way you're in control and they can't automatically debt your account in error again.

However, having them return the money to you "in the next couple of weeks" is completely unacceptable. I would call and insist that the money be returned immediately (set a time limit) or a check be overnighted to you. It's likely a waste of your time to argue past damages, but it's certainly their obligation to return the stolen $1,600 as quickly as possible. There are some specific rules under the Electronic Fund Transfer Act that may apply to this situation (or they may not, I know little about these details). When they refuse to speed this up, write the CEO's office, say that they took $1,600 of your money, have admitted that it was their mistake, and you'd like it back yesterday. Then call your bank and tell them about the unauthorized debits. The bank will likely need a written statement from you. Somewhere in that process, you'll get their attention.
posted by zachlipton at 2:17 PM on June 3, 2011 [4 favorites]

You could reasonably argue with them for interest lost on that money during the period that they held it, but that's the only tangible damage that you could argue, I'd think.

Note that with average savings account interest rates hovering at around 1%, the interest on $1600 over two months is about $2.

As zachlipton said you could definitely be a hardass about this and make them return your money more quickly, but it doesn't sound like that is a big deal for you. The main thing you have going for you is that it's not unthinkable that you would switch insurance providers over this, so you may be able to get them to do something to keep you from switching to a different company. But really there is not much you can really expect here, they made a mistake and are correcting the mistake, and nothing in your contract with them says they have to pay some kind of inconvenience fee or anything (unlike your side of the deal where underpaying has serious consequences).
posted by burnmp3s at 2:30 PM on June 3, 2011 [1 favorite]

I wouldn't expect compensation (not because I don't think you deserve at least SOMETHING beyond a "oh sorry, we'll eventually get that back to you" but because of reality) but I certainly would demand (a) a more rapid resolution and (b) a proper written apology.

And if it's insurance it's regulated by at least one government group for your area/state. Find out who and write a letter. The quality of service provided by regulated industry is something these boards don't know about if it doesn't show up in a complaint or a statistic.
posted by phearlez at 2:30 PM on June 3, 2011 [1 favorite]

Check your MeMail.
posted by essexjan at 2:52 PM on June 3, 2011 [1 favorite]

Call your state insurance commissioner and insist upon filing a formal complaint. The idea that this was a 'mistake' in the sense of being unintentional is highly dubious.

Many elderly people, who may be more likely to use direct billing the less competent they are, barely glance at their checking statements and often link those accounts to savings to avoid costly overdrafts.

Request that the commissioner audit the insurance company with a view to detecting this kind of profitable 'error', and send your insurer a copy of that request after a delay of a week or two to prevent them from doing anything preemptive with the commissioner.

That should get their attention.
posted by jamjam at 2:57 PM on June 3, 2011 [1 favorite]

You *didn't* lose thousands of dollars. If you had incurred overdraft charges or suffered some other kind of actual financial harm, yeah, you'd probably be entitled to recovering that in addition to the money.

As it is, no. They're refunding your money, that's all you deserve, that's all you're going to get. They could be nice and give you some kind of apology perk, but you already asked and they said no.

>>In my experience, the only thing that stops this is a class action suit, but then I likely didn't hear about any little settlements.

Absent a course of repeated egregious conduct and/or a bunch of plaintiffs with actual damages, good luck finding anyone to bring a class action.
posted by J. Wilson at 2:58 PM on June 3, 2011

I agree with others that since this didn't cause additional harm to you, there is not much else to ask for. But I wouldn't wait a couple of weeks for the insurance company to fix it. You should be able to go to your bank on Monday and tell them that an amount more than what you authorized was removed from your account. A little paperwork later and the credit should be given to you within 10 days.

I work in a bank in an area that sees these kinds of problems a lot. In cases where a bank customer does incur overdraft fees because of errors in ACH billing, the banks should be refunding those fees. It still causes a huge mess if the customer had other checks returned unpaid before the fix is made, but these do tend to get caught quickly because customers get overdraft notices or suddenly have debit cards that reject NSF.
posted by saffry at 3:08 PM on June 3, 2011

It happens- look at, etc. There are a lot of them. But you're right. It takes years and in the end you don't get much money out of it.

I think jamjam's right- the insurance commissioner is the way to go here.
posted by small_ruminant at 3:09 PM on June 3, 2011

What do you think you are entitled to? You are getting your money back. If you don't want it to happen again, stop the automatic payments and start sending them checks.
posted by TheBones at 3:33 PM on June 3, 2011

Response by poster: Resolution was, they sped up the process of returning my money, and apologized quite a lot. I told them that I was still understandably unhappy, but as this seems to be the way things work (and they would have been willing to deal with overdraft fees etc if I'd had any), I did not press the matter.

The fact that this is how it works seems dumb to me, as it could really screw up someone's life depending on the circumstances and seems prone to abuse as well, but I don't think trying to punish one company for it will help the situation, so I didn't try to do so. I think it was an honest mistake.
posted by SevenSpirits at 3:55 PM on June 3, 2011

We had a company deduct $12000 instead of $1200 out of our business checking account. We received a phone call same day to tell us of the error and told us if any bank fees due to overdrafts to let them know. Luckily we did not have that happen, but believe it or not I had to call the company after 3 days because they had not put the money back! I asked for a supervisor and was told they were waiting to see if the money cleared before reimbursing! Supervisor then promised it would be in first thing the next morning, which it was. But - there was no compensation for the stress this caused my husband and I wondering if they would truly put the money back in before other checks started bouncing.
posted by sandyp at 4:46 PM on June 3, 2011

I'm actually in the process of becoming an "expert" in how to audit these sort of transactions at the bank level. This wasn't deliberate, somebody just screwed up and it took a bit of time to sort out. Telling you that you had to wait was unacceptable though, most likely the person who told you that didn't know the process very well.

FYI for anyone else this happens to- it might take time to fix but you will always be made whole. Yes it's a hassle but systems break and, since they don't break very often, fixing them can take time. This was just a mistake and companies pay people like me to find these sort of errors, ideally before you do.
posted by JohntheContrarian at 7:25 PM on June 3, 2011

This is a really good reason to not allow ANYTHING to autodeduct from your checking account. Set up recurring billing to a Visa or Mastercard instead, and pay it off monthly. If you do this right you can get a 1% cash back credit card so that all of your monthly utility bills and other things (car insurance, house insurance, etc) over the course of one year get 1% back. In a situation where they double bill your account by mistake, taking out $800 or $1600 by "accident" you can **immdiately** start a charge-back/dispute with your credit card company.
posted by thewalrus at 7:32 PM on June 3, 2011

I had TENS of thousands removed from an account once through a regularly recurring debit, I never received anything more than my money back. I didn't feel entitled to anything but an explanation and a swift return. They certainly profusely apologized and it never happened again.
posted by kuppajava at 7:39 PM on June 3, 2011

From the OP's description it's happened more than once. That is a bad system and I would take off the automatic debit provisions if possible.
posted by small_ruminant at 11:57 AM on June 4, 2011

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