Susan in Wisconsin was charged an extra $10.30 last October, even though she’d already paid the next six months of her premium in full a month before. “I thought maybe I had misread my initial bill and paid the amount said to be due,” she writes. But then it happened again last month, so she began to investigate.

Here’s what happened the second time around (emphasis ours):

In March 2008, I received my car insurance premium for six months and again paid the bill in full prior to the date it was due. Subsequently, I received another bill for $11.20 a month later. This time I thought “what is going on here? There is no way I made an error in my check writing again”. I called my agent and discovered the following:

Their system is supposed to charge an additional 2% when people pay only the minimum due for the six month billing cycle which I believe is half. Unfortunately, their system has a glitch which automatically is charging all customers this additional fee even when paying in full by the date due. Although I am sure that many people catch this problem, I am also sure there are a ton of people who simply pay the extra amount with the assumption that they made an error (as I did the first time). Even worse is that this extra payment was somehow slipped into the financial abyss of the Farmers Insurance agency pocket and not applied to any future premiums. The agent wasn’t even sure if they would be able to refund the erroneously paid $10.30. The agent admitted that this problem has existed for more than a year and a half and that they haven’t been “able” to fix it yet. Sounds like a very lucrative mistake to me, and that lots of unsuspecting people are probably paying a “late fee” that they are not required to.

At what point does an error evolve into a tidy little scam on your customers? How about after you let it go on for a year and a half?

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