Aug. 28, 2006
 
COMMENTARY: Typo Fees: A New Way to ‘Bounce’ a Payment and the Bank Adds on Late Fees
 
By Tony Rutherford
Huntington News Network Writer
 
Huntington, WV (HNN) - The Internet has simplified the payment process of ‘check writing’ by allowing direct on-line payments for anything from cable and cell phone service to credit cards.
 
As the popularity of ‘on line’ payments increase, many banks and credit card companies allow you to set up ‘alerts’ for payments due, payments not received, or even a purchase that brings you too close to the limit.
 
Unfortunately, there exists no standardized payment site features, i.e. some will offer ‘automatic’ payments, some will not; some offer alerts, others do not.
 
Whatever process of on-line bill paying used, the process requires that you key in account numbers for the payee and for the account on which the debit will be issued. In both cases, there’s a long lengthy list of numbers.
 
While credit card companies generally abolished the “annual membership fee,” they now resort to the one minute past deadline “late payment fee” to offset the former membership fees. In fact, some websites charge extra ($10 or more) to make a “same day payment” (and avoid a late fee of $29-$39).
 
Your ‘insurance’ against the late fee is, of course, setting up the account so that there’s an automatic debit.
 
At least one bank (the former consumer friendly People’s Bank in Connecticut, now RBS) has added in the fine print a new way to gather fees.
 
Couched as a “returned check” item, the bottom line states that if you enter the wrong account number and the payment is rejected, it’s the same as a ‘bounced’ check. In other words, if you make a ‘typo’ on the numbers, you get socked with a $20 debit for the declined transfer AND a late payment fee.
 
Knowing that some banks seek anything possible to find a potential violation of some portion of the agreement, the ‘typo’ fee does not surprise me. But the lack of understanding of the fee by customer service reps at their 800 toll-free number does raise my ire. Two could not explain what the fee was for, acknowledging it wasn’t an ‘insufficient funds’ item.
 
Curiously, security often renders the last four digits of the account number for you to ‘agree’ or ‘disagree’ with. If they are correct and the CSR does not know what happened, how do you discover the answer to why the payment was not applied? In fact, the bank conveniently stored the ‘incorrect’ account number so I could use it a second time to ‘pay’ the account.
 
Interestingly, the CSR director responded, “it was not the bank’s error.” True, but was it the bank’s responsibility to ‘warn’ or ‘reject’ the typo-ed account number so it could not be used a second time, particularly since the error involved a left out zero in a string? And, in addition to the ‘payment received’ alert, should they not have a ‘payment NOT received alert’ or ‘account overdue’ alert?
 
A portion of this missive relates to consistency. One account does this; another does that. One company allows an automatic payment prior to the due date; another does not, you have to use your own on line banking to send the electronic check.
 
Actually, RBS should be commended to a point -- how many people intentionally mess up an account number as a way of attempting to buy extra time for payment (perhaps, at the expense of someone else)? Their ‘typo’ fee neglects to tell the customer of the mistake and their own representatives can not determine the problem just from reading the charge back i.e. “It wasn’t insufficient funds, I really don’t know…”
 
Alas, at least I indirectly figured out the problem and after appealing to the bank’s president they dropped the late fee.