Landlord Auto-Deducting My Life Away

Mike is broker than a joke.

He was getting his rent auto-deducted from his bank account, but he suspended it for this month. Or so he thought. He had been planning on sending in his check tomorrow, he has until the 6th to pay, but the landlord went ahead and took his rent out of his nearly empty bank account.

His landlord claims to never have received the papers requesting the auto-deduct to be halted. Now Mike is in the hole for the rent, plus overdraft fees and other fees. He’s trying to get his landlord to see their error, but it doesn’t seem to rate high on their priority list, so Mike came to us for some advice.

Will Mike see the true light of responsible consumerism and personal finance? Or will he fall to the dark succor of a payday loan? Read the transcript inside and find out…

(Photo: ireallylovecake)


mike hey sorry to bug you. I am have a issue with my apartment
mike I thought maybe you had a idea
benpopken: sure, shoot
mike ok so I have been living in my apartment for 10 months
mike I have used checking deduction to pay for rent reach month
benpopken: alrighty
mike this month I was going to pay with different funds so i went into my office last Monday asking to stop ERD (auto checking withdrawal). 2 woman helped me and gave me a form to fill out. I signed it and they confirmed I only wanted to stop the auto take out for March’s rent payment (this one) and start again in April I said yes. They said I was all done and it was taken care of
mike I open my checking account and the rent still was sent for auto withdrawal from my apartment. So now I am -$480.00 $200-$300 of witch is overdraft fees
mike I called my bank and they said if the apartment says it was a error I will get the fees back and the CSR recommend I start a dispute claim, “in case you don’t work it out with the apartment firm”. So i started that and they are mailing me that paperwork
mike I have talked with my apartment co. At Home Apartments is Saint Paul, MN and they kept putting me off, one woman said “how do we know you even filled out the form” since they said they lost it
mike I then talked with a nice woman who said :we will work it out” but I need to wait to speak with the property manager
mike who I was told call me today, but apparently they had a emergency so I will get a call tuesday
mike so that is my story
mike oh and if I did not just get a $100 check that i will take to a check cash place I have no $$ to live on
benpopken: This woman was with the apartment complex?
benpopken: righ yes, she was
mike the Assistant Property Manager
mike but i just left the office and now she seems more unsure
benpopken: Would it be safe to say you’re living paycheck to paycheck?
mike yes, soon that will change (after my lease is up in 2 months) and move back w/ my parents to save $800 a month
mike so I can get some $$ saved and my little bit of debt paid
benpopken: Good idea
mike although I live paycheck to paycheck I keep my checking/savings account in the +
benpopken: Lesson #1: If you have zero savings, don’t give people access to your bank account to auto-deduct
mike and I only have “savings”
mike of $10.00
benpopken: #2: Save at least 10% of your income so rainy days like this don’t hit you as hard
benpopken: Dispensing with that, do you have copies of the documents you signed at the bank?
mike the dispute forms?
mike they are being mailed I am a member of Vista! Credit Union
mike located in FL 7 CA
mike FL & CA
benpopken: ok
mike and I live in MN
mike but I can’t drop Disney’s FCU! they are cool
benpopken: I would ask them to be faxed
benpopken: And you probably need to hassle the nice lady and get yourself to talking with the actual decision maker man
mike how long shop I give the apartment before I dispute, i know with rent there are allot more legal issues
benpopken: In the meantime, perhaps ask your parents or friends for a short term loan of a few hundred bucks to get you by
mike I am willing to pay the rent just not my huge massing fees
benpopken: This is what you do
benpopken: call them tomorrow and say you need a response by end of business day tomorrow
benpopken: otherwise you will start to make trouble through the credit union
benpopken: “otherwise I will have no choice but to resolve this through the credit union”
benpopken: “You may not believe me, but their documents will show that I’m correct”
benpopken: That will probably involve additional hassle and potentially fees for the apartment complex so I think that’s something they would want to avoid
mike ok, if I do follow with the dispute what are the chances of it being accepted
mike I have never disputed anything
mike but I hope the complex will go “above & beyond”
benpopken: Well since you’re correct, a very high chance
benpopken: You don’t really need them to go above and beyond, you just need your money back
benpopken: you don’t need mints on your pillow
benpopken: Actually though
benpopken: you have two paths to follow up on
mike oh?
benpopken: The question is whether the apartment complex got the stop request and chose to ignore it
benpopken: or whether the bank failed to properly notify the apartment complex
mike the stop request was done on the apartment side
mike for the withdrawal
mike I have done this one time before and it worked fine
mike and the complex’s account claims she never got it
mike although I filled it out in their office
benpopken: ah ok
mike since my bank said all I would do in change accounts or contact them to stop a certain month or even all together
mike anyway I just wonder how it got lost in the same office
benpopken: Well with those documents getting mailed to you and your persistence, you should be able to get squared away.
mike cool thanks I hope it works out, since daily I am getting more and more fees by my guess with what with post tue I will have over $600 of overdraft fees! Maybe I should start carrying cash and not using my card for small transactions.
mike debit card*
benpopken: If you’re unable to keep track, it might not be a bad idea
benpopken: I know it can be hard if you don’t have a lot of cash in the kitty
mike I just hate cash, I stay in the black but I spend cash faster thats all
mike well in the black except now
benpopken: It stinks, cause you mess up once and they fine you, and then they fine you for fining you
mike true but at least the Credit Union CSR said they will reverse the fees if the apartment calls and deals with it,
mike well thanks for the tips
mike great site BTW
benpopken: That I don’t understand
mike what?
benpopken: fee-reversal isn’t supposed to be contingent on the merchant calling in and saying “we messed up”
benpopken: as far as I understand, the banking institution is supposed to call the merchant and it’s up to the merchant to provide proof
benpopken: and failing that, the fees are supposed to be reversed
mike oh, umm so lets say complex calls and says “we messed up” but the Credit Union won’t reverse fees (worse case) is it fair to expect complex to pay for them?
benpopken: that wouldn’t happen
benpopken: if the complex says they messed up, the credit union would definitely reverse the fees
mike ok cool
benpopken: it’s not like the bank is losing any money, they’re just shuffling it around
mike true and its not like the rent would not be paid, I am willing to pay the rent just not the fees
payday laon should I pick a CFSA member
benpopken: uh you don’t need a payday loan
benpopken: swallow your pride and ask your friends and family first
mike :( ok you’re right
mike right*
mike thanks for being honest it is
benpopken: they’ll help you out
benpopken: it wasn’t your fault
benpopken: the monopoly card read “bank error not in your favor”
benpopken: So when did they deduct the rent?
mike: today
benpopken: When had you been planning to send in the rent?
mike: we have until the 6th to pay
mike: so tomorrow
benpopken: You were planning on cashing a check tomorrow?
mike: yep
mike: I get paid
mike: but now that check won’t even put me in the black
mike: after all of the fees
benpopken: bummer
mike: yar
benpopken: Why did you ask for the auto-deduct to be taken off for this month?
mike: because I wanted to pay with another fund and I knew that I would not have the money until right at the 6th
mike: and auto-deduct comes out usually on the 3rd
mike: but that was a sat so in this case the 5th
mike: so should i cancel the auto take out after this is all done for good?
benpopken: That’s probably advisable
benpopken: will give you more control over your finances
mike: true BTW do most banks let you go this much in the hole?
mike: why did my bank just decline?
benpopken: from their perspective, they did you a favor
benpopken: they covered the fund request for you
benpopken: now, if you bounced several checks, they would just return the check as NSF (non sufficient funds)
benpopken: in this way, they saved you from the shame of the merchant knowing you didn’t have enough money
mike: ahh but then I would be in the +
mike: it is good for a small thing but this is crazy if at the end of the week goes by I think I figured I will have $1200 in fees asone
mike: I dough t that will happen
mike: from what you told me
mike: but it’s scary
benpopken: If you’re really worried about that, like I said, get a loan from your parents
benpopken: stop the overdraft fees from accumulating any further
mike: yep yep I will get that done
mike: to put a stop to them
benpopken: There is another school of thought that says banks let you overdraft and then charge you lots of fees because they can make a lot of money from doing so
benpopken: Though that would be a bit surprising coming from a credit union which is supposed to care about its members more than a traditional bank
benpopken: then again, you’re banking with the Disney Credit Union
mike: I remember the credit union orientation (YES we had one) and yes Walt Disney World’s FCU
mike: the branch manager pleading with us not to overdraft
mike: it was well, odd
benpopken: That’s because, as you’re seeing, overdrafts are teh suxorz
mike: now one last question: would this maybe have my membership at the FCU being pulled?
mike: I have heard of that happening to people who overdraft a lot
benpopken: Unlikely
benpopken: They would only do that if you bounce checks on a chronic basis
benpopken: and before they yank your membership, they would downgrade it
benpopken: take away your debit card and checking, forcing you to conduct all deposits and withdrawals at the bank in person, etc

Comments

Edit Your Comment

  1. warchild says:

    Jesus that was like reading War and Peace..

  2. faust1200 says:

    I am in the apartment business however we do not deal in auto-deduct. It sounds like Ben has it covered here. Definitely pay your rent on time which it seems like you plan to do. Definitely go over the heads of whomever you’ve been speaking to with apartment management. Either the office there doesn’t believe you (they hear a million excuses each month about late rent) or they are covering their ass for losing the paperwork. It would help if you knew these 2 ladies’ names that helped you so you could deliver that to the higher-ups. It sounds like the bank is stepping up to the plate for you and it’s in the landlord’s hands. At the apartment’s end I don’t think they have to worry about losing face and admitting there was an error. They probably put hundreds of thousands, if not more, in the bank monthly and I’m sure the bank will facilitate them. Anyway, I’ve had friends that had auto-deducts for certain things and it was always bad news ultimately. It’s not tough to write a check once a month :) Good luck.

  3. forgeten says:

    why in the name of all that is holy would you let your landlord auto-draft your account?

  4. dieman says:

    If he happens to be a UMN student this might come in handy:

    student emergency loan fund:
    http://www1.umn.edu/self/

    And to help with the landlord situation:
    http://www1.umn.edu/usls/

  5. chickymama says:

    Did he not get copies of the paperwork that showed the ERD withdrawl would be stopped for the month of March? That would solve the issue right there. All he would have to do is produce the copy to the apartment managers with the signatures of the two women on it and explain if this is not resolved now then he is faxing a copy to his credit union along with the dispute of an unauthorized debit from his account.

  6. cabinaero says:

    Eh small world: I used to rent with @Home Apartments and currently live a few blocks north of their St.Paul office. They’re on my “bad” list after they didn’t fix my heat all winter (mmm 45F nice and toasty) and also tried to forcibly tour my apartment at 9:00 am on a Saturday morning with no notice whatsoever. Needless to say the couple they had standing outside my door didn’t end up renting my apartment.

    There’s better rental companies in the Twin Cities.

  7. FLConsumer says:

    Who the heck lets someone else take money out of their bank accounts? I’d NEVER do an automatic debt with the payee in control of it. From now on, use your credit union’s BillPay and YOU write the checks online. Even better, you can have your CU automatically schedule this.

    For Mike, the good news is that this will most likely blow over without a problem in the end. Good lesson to learn early in life — Stay in control over your money. NEVER let anyone else touch it, including girlfriends. The GF can do far worse to your bank account than any apartment complex ever could. Trust me on that one.

  8. BillyShears says:

    Never, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, EVER let anyone into your bank accounts unless it’s for something absolutely critical.

    Convenience doesn’t qualify.

  9. Chongo says:

    Ok got a story about this myself… Same thing happened to me except it was the banks error.

    Basically I have rent of $875 and a car payment of $242. I had exactly the right amount to pay them both off ($1117). Of course since I’m a freelancer I had an issue with a client and being paid on time. No big deal though, I would be paid in a couple of days. I also needed some cash to get by for those few days so I decided to call the car company and stop the automated payment from going through. They tell me that they can’t do that for the current month. I then called my bank (citibank) to stop the automated payment from going through. They tell me that as long as I know the exact amount that will be posted/deducted, that its ok. I give them all the info and they say “No problem” (in heavily accented bollywoodese). I take out only about 40 bucks to last a couple of days. Next thing I know on the date that the payment is supposed to post, it actually goes through. Now The check I sent to the landlords is going to bounce in the next couple of days. I call the bank and scream at them only to be told by a manager that I need at least 5 business days to hold an automated payment. I tell them I’m so glad they told me that when I called the first time. I asked to listen to the recording of the first phone conversation but they told me that its not something they do. Anyways, check bounced and now old bitter landlords have a new reason to yell at me. Lesson learned: No automated payments WHAT SO EVER.

    Sorry, its late… night

  10. Chongo says:

    BTW my car loan company is CapitalOne Auto. They are actually really good with being late by up to a week as long as you call them.

  11. Pasketti says:

    I never use auto-deduct for ANYTHING. I use the auto-payment service from my bank (where I control how much is sent and when), or I write a check.

    This makes it impossible for them to screw up and take too much out.

  12. Mike_ says:

    EFTA (FDIC – pops):

    § 907. Preauthorized transfers

    (a) A preauthorized electronic fund transfer from a consumer’s account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made. A consumer may stop payment of a preauthorized electronic fund transfer by notifying the financial institution orally or in writing at any time up to three business days preceding the scheduled date of such transfer. The financial institution may require written confirmation to be provided to it within fourteen days of an oral notification if, when the oral notification is made, the consumer is advised of such requirement and the address to which such confirmation should be sent.

    So, for future reference, the procedure for halting this sort of pre-authorized transfer is (1) notify your bank, and then (2) notify the business withdrawing funds from your account.

    Call your bank and dispute the transaction. Follow up in writing. And next time, ask for a copy so you have proof if the original mysteriously disappears.

  13. Jamie Beckland says:

    What is the difference whether you control the payments online through your bank or set up automatic payments from the receiver’s end? I am not saying auto-pay each month, but I can make ‘one time payments’ for student loans from the Sallie Mae website.

    To be honest, I haven’t set up online bill pay at any of my banks (NOVA, ING, Bank of America, Wachovia) because I *know* that as soon as I do, they will decide to start charging for Bill Pay access. Also, it really reduces my flexibility to change banks if/when they start nickel and diming me for not leaving thousands of dollars in non-interest bearing accounts.

  14. theinsanefurry says:

    Only you and your bank should have access to your account. Too many of these companies seem to “forget” to cancel the auto-deduct when you tell them too. Find a good bank with online bill pay and use that instead.

  15. kcskater says:

    @cabinaero: something like that happened to me a few years ago. on day 3 i called the town’s building code enforcement, who happily sent out an inspector and filed a violation. it got fixed pretty quick after that.

  16. Jamie Beckland says:

    @theinsanefurry: I understand the concept that only me and my bank should have access to my account. But, this is really not the case. Any time you write a check, you are giving access to your account to someone else. And what is a “good bank with online bill pay”? All of the online bill pay programs are roughly equivalent, but once you get hitched to one of them, it makes it awfully sticky to disentangle yourself from that bank.

    The method I have had the best luck with is: auto-charge everything to the credit card, write one check per month for the full balance. Plus rewards points, plus easy-breezy disputes, plus automatic 2x warranty. If only I could pay my mortgage this way!

  17. Sam Glover says:

    Since you are in Minnesota, you can give me a call, and I might be able to help out. (My website is in my profile.)

  18. mathew says:

    I’m with everyone else who has said “Never give anyone else the right to deduct money from your bank account”, not even on a one-off basis.

    Actually, I did give my mortgage company permission for a few years, on the grounds that if they were incompetent or a bunch of crooks I was basically fucked anyway. But nobody else, and these days not even the mortgage gets auto-deducted.

  19. FLConsumer says:

    @WillScarlett: If the phone company (pick your most hated utility and use it for this example) offered a FREE!!! service to stop by your house and pick up the money for the bill each month, would you let them? Especially if it meant you gave them a key to your house and told them where you keep your money? Would you really trust them to take ONLY what was owed? Would you really trust them to stick to “We’re only going to stop by between 12pm-3pm on the 3rd of the month”? Even if you trusted them all the way to this question, what would you do if you were misbilled and they took too much money? THAT’s what letting the creditor having access to your bank account is.

    HUGE difference between letting the creditor have access to your bank account and using your bank/credit union’s online BillPay. The bank/CU BillPay is the equivalent of you cutting a check. You’re NOT authorizing the creditor to have complete access to your bank account whenever they wish. Instead, the BillPay service is the equivalent of writing a paper check. In fact, a paper cashier’s check is usually printed AND mailed to the creditor. So, you’re authorising them to receive $x,xxx.xx dollars on or after a certain date…AND only a single transaction. Compare this to the aforementioned creditor-decided setup, where they can do practically anything they want when it comes to withdrawls. So, if your water meter goes on the friz or the meter reader misreads and you end up with a $2,300 water bill, guess what? Yep, they’ll take that out of your account and you’re screwed until THEY decide to give it back.

    As far as the online BillPay services being difficult/sticky/etc, there’s none of that. I just signed up with a credit union (4.8% interest on a regular savings acct made up my mind) and am splitting the amount of money I held @ Wachovia with the CU. I probably would have eventually gone 100% CU, but they don’t seem to be set up to handle someone who spends money like I do. At any rate, setting up BillPay on the CU is just as easy as it was on Wachovia and there’s no difficulty in adding/cancelling/scheduling transactions. Other than writing a check to transfer money from Wachovia to the CU, I’ve not written a paper check in over 2 years. If you’re unfamiliar with the process, it’s a matter of clicking “Add a Bill”, type in the name and address of where the check should be cut. Then it’ll save it for future use by you if you wish. Fill in the amount, select a date you wish for the check to be mailed out on and that’s it. If you’ve already added the biller, it’s just a matter of filling in the amount and date and Send.

    As far as banks charging for online banking — NOT going to happen. They make (and save) far too much money with this to ruin it, and they know it.

    BillPay SHOULD be free at any bank/CU as banks are MAKING money off it.

    Here’s how:
    1) you write your online check to the cable co. You tell them to mail it out or have it arrive by March 12th.
    2) So on Mar 9th Bank writes a cashier’s check to the cable co on your behalf and mails it.
    3) On Mar 12, the bank takes the money out of your checking account and deposits it into theirs, since you dated the check for the 12th.
    4) Bank earns interest on that money from the 12th to the time the cable co deposits the check and it is posted by their bank.

    Sure, your $80/mo cable bill (or $240/mo if you watch a lot of Spank-o-Vision) doesn’t earn a whole hell of a lot of interest if you were to put it into a savings account, BUT, the bank doesn’t have to PAY interest out on that money like they would if it was still in your accounts, so they get the benefit of using and charging interest with your money until the cable co cashes the check. Add this up by the ~$500-$5000/mo a person has in the wings waiting to be paid and it adds up for the bank. For example, if you’ve got an average of ~$2,000 in BillPay checks written and floating at any given point, at 6% interest, the bank is making $120/year off you. MORE than enough to cover mailing a few checks out. Add this up by a few hundred thousand to million customers and it’s BIG money. Not to mention my estimate here is rather low. I don’t think many banks charge JUST 6% for loans. Probably closer to 10%.

  20. acambras says:

    I tend to agree with the people saying not to sign up for auto bill-pay with any company, landlord, creditor, etc., but I make two exceptions:

    1) My student loan payment — it’s the same amount on the 20th of every month and I get a much better rate for auto-deduct (also, if I mailed in a check late, they’d jack my rate up a lot).

    2) My retirement savings — every month, a fixed amount is automatically moved from my checking account to my IRA. Otherwise, I wouldn’t have any savings.

    But the landlord? Uh-uh. Phone company? Uh-uh. Comcast? Big uh-uh. Especially for phone and utility bills whose amounts are apt to vary from month to month.

  21. FLConsumer says:

    @acambras: I don’t know that I’d even trust a student loan agency to properly take money from my account. All it takes is one computer glitch on their end and you’re into overdraft fees and without cash in your account until THEY decide to put it back in there.

    Now, the IRA deal is another story. That’s your money just being moved from one account to another and most brokerages would respond and correct problems rapidly.

  22. acambras says:

    @FLConsumer:

    I know, I know… I set up the student loan thing several years ago, when I was too naive to know that it might spell trouble. Fortunately for me, it has gone well. And the break on the rate is a powerful incentive.

    To cover my ass, I have overdraft protection on that account, and I don’t keep a whole lot of money in it anyway — just what I need to cover checks.

    One thing Ben and Mike touched on in their IMs — carrying cash instead of using a debit card — I’ve done that since the beginning of the year and it’s worked well for me. I use a credit card (not debit) for larger purchases and I use cash for little things like trips to Dunkin Donuts. I now only use the debit card for ATM transactions. This helps me avoid forgetting to log debit card transactions.

  23. TedOnion says:

    How can I make this clear? DONT HAVE OVERDRAFT PROTECTION ON YOUR BANK ACCOUNTS! Call your bank right now and remove it if you have it. Instead, keep the best no fee credit card you can get next to it. If the debit card is declined, you can always use the credit card as a backup. Although credit cards suck, they are not as a bad as borrowing with an overdraft fee.

  24. FLConsumer says:

    TedOnion: Not all overdraft protection schemes charge a fee for their use. I have it enabled on my accounts, but Wachovia’s not charging anything for it nor its use, at least according to the literature they gave me. I’ve not had to use it yet, so I can’t verify that it is/is not fee-free.

    acambras: I use my credit card almost exclusively now. I can’t remember the last time I’ve actually paid for something in cash, other than say tipping a hotel bellman. Believe it or not, I spend LESS money with my credit card than I do cash because I enter all of the transactions into Quicken every 2-3 days. Now I have precise, pretty graphs showing me where I’m spending (and pissing away) money. Makes budgeting far easier for me…but I’m a very odd creature.

  25. malatron says:

    Hey there! I just saw that you used this photo from my account. Im glad you liked it. I like it too.