Bank Of America's shady "online bill pay" practice

[PSPS]

So, let's say you have a bill from Acme due on the 15th. You log into your BofA online account and set up the payment with the "pay by" date of the 15th. Because Acme doesn't have a direct deposit setup with BofA, they are supposed to mail the check to them which they receive and deposit. Sounds simple, right?

In the "good old days," banks used to do daily "proofing." When a check was deposited, it ended up in the proof department which would process the check and, only then, deduct the funds from the payer's account. But not anymore, at least with online bill pay.

The procedure now is that your account gets debited for the payment on the "pay by" date regardless of whether the check is cashed or not. In fact, if you log into your online BofA account, the check will be listed and marked as "cleared" regardless of whether it's been cashed or not. Pretty slick, huh?

Check never mailed, got lost in the mail or was otherwise never deposited? Or maybe the check was to your aunt Millie who decided to just tear it up as a gift? Thanks, sucker! The bank still debits your account and marks the check as "cleared."

So watch out for those dunning notices from Acme claiming that your account is overdue even though your statement shows that the check was deposited and "cleared."

And if your aunt Millie inexplicably thinks you're an ungrateful jerk, now you know why!

[Thinkingabout]

1. I was under the impression if a payment did not arrive timely a call to

The bank and they would make contact with the payee to handle the problem. I know they immediately deduct the amount from the account. I used BoA at one time and did not have a problem with the handling of a problem.

[dsc]

5. the problem is, if this OP is accurate, that you may not know the payment didn't arrive

If you send the check to a family member but the check isn't cashed by that family member, you think they have the money since the bank took it from you but they don't.

[Thinkingabout]

9. I think you can also do an inquiry to determine if the check sent has cleared.

I have been using these services for years, have had occasions of asking for assistance on payments, was given information of whether the check had been cashed, etc, always had very courteous service and they resolved the issue. Thought it was great to have someone else to fight my battle.

[dsc]

11. but you wouldn't know to ask

if the family member didn't say anything to you. Your account would be deducted just like if it had gotten cashed.

[Thinkingabout]

13. Did you ever click on the payment to see the details? This is usually in the Pay Bills menu and

a choice from there allows you to see the details. Also you can send an inquiry on the payment and they will provide you the information of whether the check has been cashed.

[Downwinder]

2. My e-check to DU came back to the bank as undeliverable.

They canceled the transaction and notified me.

[FormerOstrich]

3. I highly recommend

CheckFree at CheckFree

When I enrolled in 1994 I thought it was, by far, the single most improvement I had made in my life.

I must admit, I was extremely disappointed in the "web" version compared to the original windows (dial up version). However, I still believe them to be better than all the other options out there.

For large accounts the money is transferred electronically and deducted on the "pay date". For accounts, like sending a check to my sister, they generate a check just as I would had I sat down and wrote it out. The money is deducted, just as a manual check, when it is presented to the bank. If my sister doesn't ever deposit the check they''ll notify me there is a stale check out there but the money stays with me.

Any payment they make the will take care of for you. Many times over the year there has been claims of "not getting paid"..even payments like my mortgage. When that happens you notify them and they handle it and I mean they handle it. Over the years there has been issues that might have taken me weeks/months to detect and prove. As it is, they handle it no matter what the other party is throwing out there.

I still wish they would have stayed true to the original version but you'll never see me kick them to the curb!

on edit: Another advantage of CheckFree (and probably most of the centralized BillPay) over setting up automatic deductions with each vendor is you have comprehensive reports of the transactions. Otherwise, if you have your utility bill setup to auto pay the the utility company and your car payment to auto pay from the finance company, you don't have projections of all your expenditures except after the fact as they clear the bank.

[customerserviceguy]

4. Thanks for posting this

I handle the incoming mail at my office, and I get hundreds of these things a day, even though my company has a post office box set up in another city to handle bill payments. So very many people think that they're 'zapping' a payment electronically to the creditor, nothing is further from the truth in these situations.

The USPS moves mail slower than ever these days, and I see about 2-3 percent of mail that I get that is for some other firm or entity entirely, I wonder how many payments intended to hit my office go through someone else's hands for a few days delay. We have to process the payments manually, there's always a chance of misreading account numbers, or delays because account numbers are incomplete or incorrect.

My advice to people is to use some sort of true electronic direct transfer, make sure that the way your accounts are being paid are handled this way.

[Thinkingabout]

12. The Delivery By is listed on the page the payments are made from. If it is electronic transfer it

will list a day or so and if a mailed payment it usually allows 5 business days. I have not determined fraud on the part of the bank, love the service and will continue to use the service.

[customerserviceguy]

14. I'm not going as far as the OP is

I'm not alleging fraud, all I'm saying to people is to not expect that all payments sent from an online bank billpaying service to be some sort of electronic transfer.

The best things that people can do are:

1) Verify if the creditor is being paid electronically or with a mailed check.
2) Make sure that the account number and mailing address of the creditor match the information on your last bill 100%
3) Allow plenty of time for processing both on the bank's end, the USPS delivery time (allow more during periods of inclement weather and at major holidays), and on the receiver's end.

It's not a bad idea to pay a bill as soon as it comes in the door, if you have the money available to do so. The amount of interest you'd lose is extremely minimal, if it exists at all.

[cilla4progress]

6. No longer deal with these fraudulent

consumer banks, other than the house mortgage we're already committed to. Switched the entire family to a local credit union over 5 years ago. So glad we did!

[Princess Turandot]

7. When a bank sends a check on behalf of a customer...

they have to know that the money to cover that check will be in the account when the check does clear. The only way they can do that AFAIK is by 'deducting' the amount from the account, which reserves it for that specific payment.

I don't know why they're not distinguishing 'issued, not paid' checks on the bank statement, though, for the customer's information. The bank I use shows pending transactions in red in the online account, and deducts the money. (I've only used direct transfers initiated by vendor, however, not this type of bank written check.)

[lamp_shade]

8. Hmmm... mine (BOA) always say "pending" until the check has cleared.

[hobbit709]

10. I pay all my bills directly to the website of whoever it is.

Not that I would use Bank of Armenia in the first place(that's what a friend of mine calls it)