CitiFinancial Auto Keeps Deducting Payment On Zero Balance Loan, Triggers Overdraft Fees

Marc’s monthly budget just exploded into a mess of overdraft fees thanks to CitiFinancial Auto’s negligence, and now he’s not sure how to get them to actually do anything to fix it.

He writes:

I had a car loan for two years with CitiFinancial Auto. I never had a late payment and was set up on Direct Debit from my BoA Checking Account.

Last month I traded in the vehicle on another car, at which point the loan was paid off and I have verified that fact with CitiFinancial Auto.

My issue is that on the 9th of this month they still took out my usual payment of $478.72 via Direct Debit even though the loan was already payed off. Upon contacting them I was told that they would issue me a check at the end of this month. I told them that I couldn’t wait that long, and I won’t even go into a rant about what would happen if I owed them money and told them that!

Anyway, the customer service representative them told me that if I faxed over a running copy of my bank statement along with my CitiFinancial Auto account number, Bank of America branch address, routing number and my account number to a Team Lead that maybe they could put the money back in.

It’s now been one week and they have done nothing. I have my monthly bills closely planned out as all of my bills are on direct debit, and today my checking account went negative, which will incur an outrageous overdraft fee from BoA, and I have two more bills coming out before I get paid on Friday which will result in three overdraft fees for a total of $105.

Is there anything you guys know of that I can do to not only get my money back that was wrongfully taken but also get them to cover my overdrafts that were a result of their screw-up and failure to correct it? Thank you!

Marc, you can try to find a number at CitiFinancial. Does anyone out there have a number he can use to talk to someone who can actually do something?

Comments

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  1. BadgerPudding says:

    I would think that the consumer would have to go to his account and cancel the auto-pay option himself. How is BoA supposed to know you sold the car?

    • cheezedawg says:

      Maybe because the loan balance was $0? Thats a hint.

      • PunditGuy says:

        Badger is on to something, if the auto-pay is set to automatically expire after a set number of payments rather than when the loan balance is 0.

        • cheezedawg says:

          Maybe. I understood the situation to be that he got the loan through CitiFinancial and set up his CitiFinancial account to autopay every month by ACH from an external account. In that case, it is reasonable to expect CitiFinancial to turn off the autopay once the loan is paid off.

          If they did implement their autopay to expire after a set number of payments without looking at the balance, then they are stupid. Car loans get paid off early all of the time.

      • BadgerPudding says:

        I’m just confused, because I have a bank account in which my bank pays my student loan payment every month.

        My bank doesn’t know how much that student loan is for. All they know is that I’ve told them to transfer that much money every month.

        They will continue to do so until I tell my bank (not the student loan company) not to do it anymore.

        • Gandalf the Grey says:

          It would depend on who originated the draft.

          If the OP was letting Citi draft from his account, the issue lies squarely on Citi.
          If the OP set up payments from BoA’s BillPay feature, then sorry bud, it sucks but you should have canceled that.

          With all the recent stories about banks foreclosing or utilities threatening to shut off the juice for a $0.00 late payment, I think we’re just going to all have to start assuming that nobody in these banking institutions has enough brain cells to use logic for anything.

        • Anonymously says:

          I believe the “direct debit” means that the loan company is taking money from the account automatically. Basically it’s the opposite direction of bill pay.

    • Murph1908 says:

      This all depends on if it’s an auto ‘push’ from the bank, or an auto ‘pull’ from Citi. I was assuming it was an auto pull, since he’s complaining about it.

    • clint07 says:

      This is a direct debit through Citi, not an auto-payment through the bank. So it’s not that his bank account is sending the money, Citi is debiting the account each month.

      • BadgerPudding says:

        Ah, I thought he was using BoA’s auto bill pay. Seems like a better way to go all around as you have a lot of freedom to control, up until the last minute, how much money is sent.

    • badachie says:

      There is a difference between direct debit and online bill pay. It sounds as if the OP had Chase debit his BoA checking account each month. This is different that telling BoA to pay the Chase each month. If the action was initiated by Chase and not BoA, then the OP deserves to be compensated for overdraft fees.

    • emrichar says:

      I think he is referring to an autodraft set up by Citi and not a reoccurring bill payment set up through the online bill pay with BoA. I have accounts like this, where the creditor auto debits your account for a set amount on a set day each month. The problem here seems to be that Citi has not canceled the auto debit in their system, not that the OP hasn’t canceled the recurring payment via his account.

      • craptastico says:

        you should really cancel your autobill. this can happen, but i also know someone who’se car insurance was cancelled b/c they insurance company f’ed up and didn’t take the money for some reason. it’s much safer just to pay the bills online at your command instead of having them automatically take the money.

      • dbeahn says:

        Tip: set up a secondary account for this. All of my auto-draft payments debit out of an account that carries an average balance of $10. A few days before the bill is due, I transfer the money from my real checking account to the dummy account.

        It is exactly the scenario described in this post that I was afraid of, and that led me to setting it up the way I did.

        • Conformist138 says:

          So why on earth do you auto-pay? Why not just pay directly from your primary account? The point of auto-pay is to not have to bother with actually making the payment yourself. You just made all your bills due a few days earlier than they really are while keeping the exact same amount of work, which is… nice?

  2. Polish Engineer says:

    I know that Citi has put you in a pickle here, and they deserve to be thrashed. However, if you don’t have the cash, TURN OFF THE OTHER DIRECT DEBITS!!! Whip out the trusty credit card and pay your bills. If the 500 bucks Citi owes you covers the other bills, just float that cash on the card until you get this sorted out. Don’t put yourself out a 100 bucks you probably won’t get back from Citi.

    • alSeen says:

      Heck, this is exactly the sort of situation that the payday loan places are good for. For less than the cost of one overdraft, you can get the funds you need and then use the money you get back from the bank to pay off the loan.

    • Anonymously says:

      This is good advice. You’ll have very little luck getting them to pay the overdraft fees. It’s better to stop the fees from happening.

    • EllenRose says:

      I tried something like that with Wells Fargo, and they told me -I- could not cancel the direct debit, I had to get the payee to cancel it.

      I no longer bank with Wells Fargo.

    • sleze69 says:

      Someone explain how this isn’t stealing. How long does a company have to pay you back for “mistakenly” taking money from you that they are not entitled to have?

  3. Murph1908 says:

    Screw direct debit. Another post explaining why.

    And I see no reason whatsoever that you should be required to send over your bank statement to them. The only things you should need to get this credited, they should already have.

    Your account number, which they used to pull the debit.
    The record that they charged you on the 9th of this month, which is in their records.
    The record that you paid them off already, which they will also have.

    • tbax929 says:

      Agreed. I’m not blaming the OP, but this is another example of why direct debit is such a horrible idea. If something gets screwed up, you’re really screwed. I’m a fan of paying through online banking, but I go in for each payment and tell USAA what to send and when to send it.

      Again, the OP did nothing wrong. But it sucks that they can take money from you immediately, but when they owe you money, you’re at their mercy. Don’t use direct debit.

      For accounts that require a card on file (TiVo, Netflix, etc.), use a credit card and pay it off every month.

  4. MikeB says:

    I have my monthly bills closely planned out as all of my bills are on direct debit, and today my checking account went negative

    This is not a blame the OP thing, but the last part of the quote is the reason that i will not use direct debit for my bills. You do not have control over the payments and cannot stop them if there are issues.

    While this doesn’t help get your money back from CityFinancial, here are a couple suggestions for bills.

    1) turn off direct debit
    2) For those bills that do not have this option, either setup an ING type account and use that to pay those bills or setup a credit card whose only purpose is to pay those bills and pay that off monthly
    3) Use BoA’s bill pay.

    • SoFlaSnowMan says:

      +1

      Direct debits should never be used. You are effectively handing over your checkbook to a third party over whom you have no control.

      • howie_in_az says:

        Why is it that consumers paying bills works out well but companies taking money directly from accounts invariably screws up?

    • meltingcube says:

      I personally only use direct debit for one bill payment, my car insurance. This is because I get a discount of about $45 just to do so. My car payment is paid via my bank’s bill pay service, and everything else is paid using my credit card.

      • meltingcube says:

        Additionally, I remember when I did pay my previous car payment using auto debit, there was a statement in there that said I needed to contact them to stop the auto debit if the loan is paid in full, else they will continue to take the money and put it into a checking account with them.

  5. Thyme for an edit button says:

    Executive email carpet bomb.

    If that doesn’t work, you could research small claims court in your state and whether consequential damages such as the overdraft fees are recoverable in this you’re of situation.

  6. refaris says:

    I agree with Polish, that you should heckle city as much as possible, that is just negligent and destructive. However, I don’t mean to insult your budgetting, but in all honesty, if you don’t have an extra $500 kicking around at any given moment… you should not have a $500/car payment, and should not have just traded in for a new loan. Just my two cents.

  7. sanjaysrik says:

    Which is why when someone tells me that they have direct debit, I say, um, why don’t you schedule the payment FROM the bank account instead? I NEVER do direct debit. I’ve had many friends who have had this happen to them from many vendors. Then, tt’s the consumer who has to fight to get their money back from the boneheads at whatever company mistakenly took the money. You can set up auto billpay, how come more people don’t do that?

    • Shtetl G says:

      A lot of vendors offer you special deals if you set up autopay through them. Dish network will give you 3 months free HBO, showtime, etc. I know everyone bitches about BOFA but their online bill pay is quite nice. You can schedule the exact amount and # of payments. You can edit those payments at any time. It has dramatically improved my ability to pay my bills on time.

      • sanjaysrik says:

        Using only ING as my bank, I never pay attention to any “offer” from any vendor. It’s always for their own benefit and I just don’t trust something like this not to happen. I don’t do overdraft fees.

    • BrianneG says:

      I use direct debit for my student loan only, because it gives me another 0.5% interest rate reduction. When you still owe $26K, that interest rate reduction is worth the hassle. Usually, I pay my bill at the beginning of the month and then they autodebit me again at the end. I end up paying twice as much but at least it’ll make the loan go away more quickly.

  8. Nigerian prince looking for business partner says:

    This sounds a lot like how 5/3rd Bank handles auto payments.

    The bank doesn’t process the payments for loans, it’s handled by a third party called Bill Payer 2000. When you pay off a loan, you also have to notify Bill Payer 2000 to cease the auto payments. The bank should notify the customer of this when they request the payoff amount but I could see how it would fall through the cracks.

  9. GearheadGeek says:

    I apologize in advance for the blame-the-OP tone, but it does sound like this was avoidable. Let’s assume that the direct-debit thing works well for the OP most of the time, I don’t like it for myself but that’s not the soap box I’m going to climb on.

    It sounds like the OP had about a week’s notice that this wasn’t going well. Once the $478.72 was pulled and CitiFinancial didn’t commit to replacing that money in very short order, it was time to take action to prevent a domino effect. Does the OP have a nearly-$500 car payment and no funds outside the tightly-budgeted checking account? No way to raid savings to do exactly what savings is for, cover unexpected shortfalls in the budget?

    If there was extra money somewhere that could have been moved around to cover this, that would have been the cautious course of action while prodding CitiFinancial to correct their clumsiness.

    • tbax929 says:

      I think the mistake the OP made was allowing access to his bank account in the first place via a direct debit setup. I understand the convenience of it, but when things go wrong it always takes a while for them to get fixed. For me, the risk not worth the convenience.

      I am not, however, prepared the question the OP’s finances. Some people live check to check. Neither you nor I know anything about his situation and why his budget is so tight. Maybe he was unemployed for a while and just started working again and is getting back on his feet. Maybe he is unemployed and living on the measly amount they give you for unemployment. Maybe he is going through a divorce that wiped him out. My point is that we don’t know. I imagine if he had ample savings to cover the $500, he wouldn’t be so worried about it, so he probably doesn’t.

    • peebozi says:

      I agree with your first paragraph though my solution was for him to get a second job so he doesn’t have to manage things so closely.

  10. personalmoniker says:

    I ran into almost the -exact- same problem a few months back. The problem is that Citi Auto doesn’t talk to Citi Online when an account is closed out, so Citi Online just goes ahead and keeps charging you until you cancel your Direct Debit with them – in which case, I hope you have another web-enabled account with them, or you can’t access that part of their website!

    What I did was call the Web Banking number, instead of the Auto Finance number, and explained the situation to them. They were able to turn off the Direct Debit, and put a flag on the payment to have it returned sooner. It still took about 2 weeks to get back to me, however, so try and escalate to a supervisor to see if you can have them expedite it.

  11. qbubbles says:

    This is the exact reason why I absolutely abhor direct debit. There is absolutely no reason why any company needs a direct link to my bank account. I pay all my bills on time and have a very simple way to organize them all. I dont need their “help”.

    Peace of mind my ass.

  12. Thorin78 says:

    Don’t people have savings accounts anymore? Do people keep all of their cash in a checking account? Perhaps the OP should borrow some money from friends or parents.

  13. spazztastic says:

    This is why i never put an auto pay on my bank account…something I violated when I took out a loan (from the same bank) to pay off my bills, but I can budget it right.

  14. sirwired says:

    Tell BofA TODAY, that the withdrawl is fraudulent, and they should put the money back within 24-48 hours (I can’t remember what the laws are on this.) That doesn’t necessarily prevent the same screwup next month, but you’ll have your money back.

  15. oldwiz65 says:

    Don’t hold your breath waiting for Citi to issue you a refund. They will most likely take several months and argue with you and demand repeated faxes, all the while continuing to debit your bank account, which can add up to several thousand after 6 months or so. Even then, they will NOT pay your overdraft fees and will not apologize to any credit reporting companies. Hiring a lawyer would be a good idea, but it would probably cost more than you would save. I would seriously consider closing your bank account and opening a new one as it’s the safest way to do it. Don’t forget that there is not a lot of incentive for Citi to correct the problem.

  16. Elginista says:

    Just last week, I refinanced my mortgage, which used to be held by CitiMortgage. Yesterday I got a letter from Citi saying that I had to cancel the auto-pay within four days of them issuing the pay-off letter to avoid being charged my next regularly scheduled payment. I did so online and got confirmation, so hopefully I’ll avoid this! I know CitiMortgage and CitiFinancial are different entities of the same giant company, but I would guess the process would be the same? I would like to believe that Citi would be smart enough not to debit a payment for a loan with a $0 balance, but this is Citi we’re talking about.

  17. lost says:

    never ever let anyone auto deduct from your account. you are the one who should set up auto pay which you can cancel yourself and not rely on a 3rd parties good graces to stop the auto debit.

  18. BrianneG says:

    Citi in general can’t figure anything out. I consolidated my student loans with them and they’ve always been a hassle. I recently got married and needed to change my last name with them. They have a form online, which I filled out, and it asked me to fax a copy of the form and a copy of my marriage certificate. I followed their instructions precisely and a few days letter received THREE letters in the mail from them over the course of two days. The first letter (which hyphenated my old last name and my new last name) told me that they couldn’t process the request because I didn’t hand-write my account number on the marriage certificate. (I don’t recall that ever being an instruction.) The next two letters (received on the same day) were identical to each other and told me that my marriage certificate was illegable and they would need me to mail them a copy. I guess it was really illegible because these letters didn’t have my new last name.

    So I mailed them a copy in one of the three envelopes they provided me and it’s finally fixed.

  19. Rob says:

    File a dispute in writing (not over the phone) with BofA for the debit.

    BofA should provide a provisional credit while they investigate

    • Torop says:

      I’ve actually had a mistaken debit taken from one of my accounts and was able to get it handled from the online customer service chat. BofA can be pretty lousy about most things, but if the debit was not your fault, they will waive your overdraft fees as soon as the other company reimburses you for the debit.

  20. dush says:

    Direct Debit = bad news.
    Do not let corporations reach into your wallet at their discretion.

  21. peebozi says:

    this guy should make more money so he doesn’t have to cut it so close…a second job or a raise at his current job.

    i don’t know why the onus should be placed on the corporation…this is america and these corps have paid good money to buy our politicians.

  22. brinks says:

    Call Bank of America. A couple of other posters mentioned this, but report it as fraud and they should be able to give you a provisional credit.

    I’d also gather up all of my documentation and find out when the branch manager at that Citibank location will be in, then pay him/her a visit.

  23. fmatthew5876 says:

    This is why I never enable direct payments on anything.

  24. Anomaly69 says:

    Don’t ever use direct debit and you won’t ever have this problem.

    I wouldn’t give Jesus Christ himself access to withdraw money from my accounts. You know how many times I’ve had your problem? A big fat zero times, that’s how many.

  25. Anomaly69 says:

    Don’t ever use direct debit and you won’t ever have this problem.

    I wouldn’t give Jesus Christ himself access to withdraw money from my accounts. You know how many times I’ve had your problem? A big fat zero times, that’s how many.

  26. Torop says:

    BofA will actually reimburse your overdraft if the cause was a mistaken debit as soon as the money is given back to you.

    Enterprise once took out a deposit for a rental off of a different card then I specified which made my account being overdrafted. Once Enterprise reimbursed the deposit, BofA removed all the overdraft fees. You just have to let BofA know about it.

  27. frozenactivist says:

    Citi Cards refunded me my overdraft fees when they processed an automatic payment for a bill that I’d already paid by phone earlier in the month, so you might have some luck. However, if the overdrafts aren’t directly triggered by their transaction, you have a weaker case.

  28. Tom Foolery says:

    Don’t just tell them that you want to give the house back. Tell them that you want to give the house back in good condition, but that there have been a lot of break ins on foreclosed homes in the area and houses have been vandalized, and is there anything that they’d like to do to try to keep that from happening?

  29. Jimmy37 says:

    DON’T DIRECT DEBIT!! You’ve just learned the main reason why. If you have any problem keeping money in your account for any reason, you can’t stop companies from taking money out, possibly causing an overdraft. Of course, it doesn’t help that you insist on using BofA, regardless of the all the bad things they’ve done to other OPs here.

    As other poster have pointed out, you should be using your checking account’s bill pay to pay your bills. It’s not as convenient because you have to remember to schedule the payments. In my case, I use ING. I keep most of my cash in my savings account. If I forget to transfer money to my checking and I don’t have enough money in it, ING cancels the bill pay without any penalty. They will also notify you with an e-mail message if that happens. ING also has low-cost overdraft protection where they loan money to you at a reasonable rate. None of this $39 overdraft fee BS.