This is why I never use auto pay. If I know a bill is around a certain amount, I will send that amount each month plus a lil. Builds a lil slush fund on each bill too

@ Avi Oslick... this is a terrible idea. Why don't you just give your money away? Either pay the right amount or have somebody pay the right amount. You are doing the exact opposite of having your money work for you.

I absolutely refuse to use auto pay or give any other company access to my bank accounts. I'd much rather take 20 minutes out of my week to pay the occasional bill manually. The nightmare auto pay can cause in cases like this simply isn't worth it.

Autopay is never a good idea. I've been double charged multiple times by different companies all because of that stupid feature. Having to fight for your money because of "convenience" is a pain in the ass.

wait, so she had .28 mil in her account? sweet.

@Coksibum: Yeah, coz that .00000000000001% the bank is paying is so much better

No, the moral is "Never ever use auto pay".

Never ever give anyone the ability to arbitrarily grab money out of your bank account. In this case, it was pretty obviously an error, and the company acted promptly to fix it. But if it hadn't been autopay, the customer would have noticed it immediately, and never had to go through the hassle of bounced checks, etc.

@sodomanaz: It a balance - is the convenience of autopay worth the occassional hassle of having to dispute a bill?

For me the convenience is worth it as I only autopay from a credit card. That way I have NFCU and Amex on my side to fight my fights.

It'S a balance even...

@Coksibum: You are so right - much better to just let them take what they think you owe them...

you evidently have much more time on your hands than some of us do. Every July I sit down and add up my bills for the previous year, then set an auto pay from my account for that amount plus 10%. I have never been short, and I have never ended up negative at the end of that year. It is much less stressful than worrying about how that extra $200 is going to "work for me."

Seems to me that in these cases, the entire amount should be returned and the account wiped clean. Free service for a month is the bare minimum punishment for doing this, IMHO.

To all of the "don't use autopay" people...sorry, I simply like the convenience of not having to sit down and do a "bill night" where I manually write out checks, addresses, put on stamps and labels and hope the bill actually finds its way to the intended recipient. Has worked well for me so far, and I always check my bills to make sure the correct amount is being taken out. In most cases you get billed 1-2 weeks before the money is taken out, which allows you ample time to solve any problems.

I do not use auto pay, but I do use MSN bill pay. My bank has free bill pay service but it can only be tied to the accounts at that bank. With MSN, you can have multiple accounts at multiple banks. It costs about $8/month.

I am in control of how much money I send out to each company and when they receive it. Since I pick the date the recipient receives the money, the money stays in my account until the due date.

I have been using it for over 2 years. It saves a lot of time and postage so it is worth the $8 to me.

The good news is that excel refunded her money and overdrafts and she got free publicity for her restaurant

Autopay is actually a good thing in most cases. In this I'll have to take up the soap box of the "Blame the OP"
Really, not looking at your bill can be the great undoing of people. Take a few seconds to just look at your bill a little longer than the cursory glance. I know so many people I talk to in the day for my utility company that confess, they never open their bills!!!!

Now to blaming Xcel. That is just poor poor poor business system they are running. Heck my billing dept is a month behind schedule cleaning up accounts and they are still notified if a bill unusually high goes through thanks to a simple computer program. I don't know its name but it is pretty simple, cause the system is MS-DOS for the program that is in use. Plug a number in too high and it says it is too high given the normal history.
How they ever let a bill like that get out is just embarrassing.

@Saboth: I don't do auto pay, but neither do I sit down and write out checks. Once a month I log into my banks website and pay all my bills on-line. It takes less than 30 minutes, doesn't require writing a single check or stamping a single envelope, and it's fully in MY control.

How about blame the bank?

For everyday folk... it should NEVER be possible to overdraft (puts pinky to lips) ONE MILLION DOLLARS!

I mean... the computer program should limit overdrafts to $1000 or so (actually they shouldn't be allowed at all, but if they're going to be allowed...) or...

On autopay, allow people to set their own limits for how much they allow to be paid -- i.e. if my elec bill is normally $100, I'll allow $200, but no more, to be withdrawn.

Most utilities (electric and gas) allow a balanced billing option. This makes budgeting easier as the amount is the same every month. They estimate your usage for 6 months and charge you the same amount for 5 of those months. On the 6th month, you either get a discount or have to pay a little more, based on your usage. Most companies require 6 mo - 12 mo of usage history to start balanced billing.

Personally, I like not having gas bill surprises in the winter and electric bill surprises in the summer.

That said, I always CAREFULLY check my usage each month and read the bills.

@JGKojak: I like that idea--making autopay something more than just carte blanche.

I use autopay because I've gotten sufficiently overwhelmed at times that there was more risk of financial penalty from late payment than there was of autopay going bad. I did have a similar seven-digit power bill several years back, but fortunately it got corrected before the deduction came.

This is why I love bill pay- takes less than 10 minutes to do all my bills, no stamps or checks, and they get the money in 2 days.

@Saboth: IIRC, you don't have to mail anyone anything most of the time these days. You can either do it online or in person at the bank. You just have to at some point goto the bank and have that company added to a list of billing accounts you can pay though them (if they offer that service). It's basically "autopay" except you have to initiate the transfer rather them grabbing the cash themselves.

I only do auto pay on one bill, a student loan that (stupid me) as a variable interest rate. Reason I do autopay for that bill is I get an interest rate reduction with it.

Good news is the company involved is very good about notifying me in advance of a payment amount change (lately due to interest rates dropping, it has dropped a ton!).

I have my Bank of America account alerts setup so I instantly know when this bill is processed and money is taken from my account, so I can quickly call the bank and the loan company if something is amiss. So far (knock on wood), everything looks right.

I agree...autopay is just a bad idea all around. When the company makes a mistake, you're left to spend hours fighting for money that never should have been taken in the first place.

I use online billpay through my credit union. Takes me all of 2 minutes, and I know exactly how much is coming out, when I request it to be sent, and I dont have to worry that some idiot company is overdrawing my account by $1 million.

Autopay is a pain to get setup, but once active can be just as secure as paying manually (most companies send a bill before deducting the funds) with the added benefit of never missing a payment (bill was lost, went out of town, bills come in at opposite ends of the month, etc...)

@bobloblawsblog: Having $280,000 in an account doesn't sound that unreasonable for a restaurant owner. Especially in a town as large as Aurora, CO.

I've use AutoPay for several of my bills for the last few years and i have never had a problem. Just because someone else has issues with it, isn't going to make me stop using a service which has made my bill paying just a bit easier.

Autopay is okay....IF...you can do it with a credit card. I have every bill set to autopay with my credit card. The ONLY one that doesn't autopay is my Kohls Credit card. I pay phone, tv, internet, gas, electric, cell phone, etc all with my credit card. I even pay my kids college tuition on the credit card.

So once a month I log in to my credit card, review my statement and pay it. I then login to Kohls and pay it. 2 logins a month to pay over 10+ bills. Plus I get miles toward a trip. And yes I do pay my bill in FULL every month.

So moral of the story...yes use Autopay IF and only IF you can tie to a credit card that is paid in full every month.

Rick

@Teradoc:
I highly doubt the billing system is ms-dos. Many people, when they see something that doesn't have a bitmapped graphics interface say "Hey, it's running ms-dos!" Most billing systems I've seen run on an IBM mainframe, AS/400, or RS/6000 (I don't know what they're called now... I think system i and system p respectively for the latter two). You usually access these through an IBM 3270 terminal emulator running on a PC.

Nobody can take money out of my bank account except for me. I have control issues like that. I sit down and write out the checks once a month. And frankly, it's worth it. It forces me to look over the bills to make sure I'm not getting charged for anything I shouldn't.

Autopay is very risky - especially to those who don't balance a checkbook. That's also why I never use a debit card. It's very easy to forget to note how much you're paying.

I should also mention my father was a banker. I overdrew my bank account...once. I received a note at school to skip football practice after school and head downtown to my father's office. When I arrived, the women at the front desk were being unusually nice to me. Dad called me into his office, slammed the door, and let's just say I have never overdrawn my bank account since.

I much prefer using my CU's billpay. It's quick and easy, and I tell it how much everyone gets paid. I would easily notice a one million dollar bill.

BTW, who's doing Xcel's math? Is it Verizon?
".8¢/KWH and $8 per KWH are the same if you look at them on paper-wise!"

Clark Howard recommends that the only time you should use an automatic pay situation is with your mortgage and they are willing to knock off a quarter to half point of interest in exchange for the risk.

@JGKojak:

THIS!!

A transaction this large should have returned "Insufficient Funds" to the program running the debit action, which would have denied it and flagged an administrator to look at it, or at the very least send a notice to the customer.

I use autopay, but I use a credit card, rather than my bank account - this gives me an extra layer of security.

What makes me most aghast is that the bank allowed a $1 mil overdraft? Which was apparently four times what the customer had in their account. With all the scams out there, you would think that a $1.28 million check would have raised a red flag at the bank!

Does it sound like a smart idea to grand unrestricted acess your your checking account to an organization whos only purpose is to acquire money?

Didnt think so.
15 minutes to send a bill, or 2 weeks dealing with the company and the bank when crap like this hits the fan.

jesus - why oh why do people set up their BANK ACCOUNTS for bill payment?

That's like giving someone the keys to your house and saying "take what you need" from my desk drawer.

Write a friggen check. With ING, Chase, and other banks you can have it sent directly from your bank (via your bank site) so you don't even have to write a check, hunt down a stamp or mail it.

So I'm curious. How is this any different than theft. If I took $1,000,000 that didn't belong to me, it really doesn't matter if I gave it back when somebody caught me. In the eyes of the law, I still stole a million dollars.

How is this any different?

Furthermore, WHAT BANK IN THEIR RIGHT MIND PAYS A CHARGE THAT ALLOWS AN ACCOUNT TO BE A MILLION DOLLARS OVERDRAWN?????????

@JGKojak: I agree 100%. There ought to be mechanisms in place at both ends to prevent something like this from happening.

@Jeff Newman: Unless she has a Ultra Mega Platinum I-Make-Huge-Ass-Transactions-Daily Corporate account this should have set off all kinds of flags.

Is it just me or does "Autopay" not seem to have the same regulations that "Direct Debit" has in the UK? I used to use direct debit all the time when I was in the UK and never heard of a problem.

@chris_d: It's probably an account number turning up in the amount due field.

@chiieddy: Both the gas and electric companies where I live offer this, and if you look closely you'll see that your balanced billing includes an interest charge of about 4%. I'd rather budget accordingly by season than just hand over extra money to my utilities.

There ought to be a law ...

... that requires banks to refuse any automatic payment that exceeds the money currently in the account, unless the account holder specifically authorized overdraft for autopays, and then only up to the amount in that authorization. Banks should also allow account holders to set specific limits on each autopay.

As a business in Colorado, we use Excel (don't have a choice really) and they REQUIRE AUTOPAY or you have to give them a $1,000 DEPOSIT (at least in our case that's what they said)

So - as you do in this economy - we opted to save a grand and just sign up for AUTOPAY. And would you guess it - the VERY NEXT MONTH we were overcharged by just under $7000. Yes - 7 THOUSAND. (on a bill that normally runs about $800 monthly)

Even after the ERROR was figured out (they had charged us for an entire extra rotation on our meter because we didn't use as much energy as they thought we should have used) Excel was UNAPOLOGETIC and claimed that it was our estimated total and that they HAD THE RIGHT to take that money from our bank account. When asked to return it they put is through the ringer - it took a week and they would not allow us to talk to their accounting department AT ALL.

Customer service was the WORST. The phone rep was yelling at US on the phone because we asked that the surplus from the charge be put back in our account and the over-draft fees be returned.

Currently Excel has not reimbursed us for any overdraft fees or issued any form of apology.

never do autopay for utilities or phone bills.

@ideagirl:

Wait a second Idea, you pay all your bills in July? Huha! You must pay a heck of a late fees bill...

@edwardso:

Am I getting it wrong here? The company did not refunded the money. They just returned what they stole. And on the overdraft charges, it sounds to me, at the time of this story, that they still haven't paid that!

"wiped out the bill and HAS PROMISED to pay any overdraft charges,"

Do not believe in banks promises. Didn't Citibank asked for taxpayer money; got it free and clear, and now reported that they got net profits during 2009 first quarter?

@rick_in_texas:

I too pay my bills with my credit card and then pay my credit card with online bill payment. However, I'm surprised your kids' colleges still allow credit card payments. I know a number of colleges have stopped doing that in recent years because they don't want to pay processing fees and they know that everyone is just doing it for the miles.

@JGKojak:

Got it right JGK! How come if I go to a gas station and pay at the pump with my debit card, the bank freezes ALL my funds for 48-72 hours? The first and only time this happened to me was on a pay day, for $25 of gas and few pounds of ground beef. They froze ALL my paycheck for $25? But then they go ahead and debit $1.28 million to that woman's restaurant account? Shoot, I know she has more money in her business account that me in my small mousy account; but one thing is for sure, she's not Bernard Maddof, she doesn't have that much money! I guess!!

@Avi Oslick: Yup...never, ever use auto pay. Why give a company authorization to pull from your account. Never allow money to be pulled automatically, always push, not pull.