Will my debit card be rejected if there are insufficient funds in my account?

April 30, 2015 20:20 by Consumer Ed

Dear Consumer Ed:

Are banks obliged to reject attempts to use a debit card when there are insufficient funds in the account?

Consumer Ed says: 

When you use your debit card to make a purchase or other electronic payment for an amount greater than the balance in your checking account (thus creating an overdraft), the bank can choose to make the payment, or not.  In 2010, the Federal Reserve issued new rules regarding fees banks charge for overdrafting debit card and ATM transactions.  Under the old rules, banks were permitted to automatically enroll their customers in their standard overdraft practices.  These overdraft practices typically involved charging customers a fee to provide the additional funds.  However, under the new rules, the bank must obtain the customer’s permission to apply its overdraft practices to the account before charging a fee, which the customer typically provides by agreeing to a notice sent by the bank. 

If you don’t opt in to overdraft procedures and you attempt to make a purchase or withdrawal which would overdraft your account, the transaction will typically be declined, but you won’t be charged an overdraft fee.  However, if you’ve opted in to overdraft protection, your account can be overdrafted, and the bank can then charge you the fees set under the terms in your opt-in agreement.  Be aware that these fees can mount up quickly, so make sure you know what you’re agreeing to.

When setting up new accounts, pay careful attention to the documents you sign.  If you prefer your card to be declined and your account not to be overdrafted, don’t sign the opt-in form that will enroll you in the bank’s overdraft protection plan.  If you’d like the overdraft protection, then sign the form.  If you’ve previously enrolled in the overdraft program but no longer wish to be, you can contact your bank and opt-out of their overdraft policy.

Again, these rules apply to debit card and everyday transactions; they don’t cover checks and automatic bill payments.  Banks can still automatically enroll their customers in standard overdraft procedures for payments made using those methods.

In sum, to avoid overdraft charges, remember:

  1. Do not sign an agreement with the bank authorizing overdraft charges.
  2. Keep track of the money in your account by keeping your check register up to date.
  3. Make sure to record your electronic transactions as well.
  4. Make sure to take into account automatic bill payments.
  5. Review your account statements each month.
  6. If you do overdraft your account, deposit money into the account to cover the overdraft and any fees in order to avoid any additional charges.
  7. You can link your account to a savings account. You may be charged a transfer fee when overdrafting your checking.
  8. You can link your account to a credit card you have with the bank.  You may be charged a cash advance fee when overdrafting your checking.

 
If you have a complaint about the fees charged by your bank, you can try to resolve the problem directly with your bank.  If you make no headway on your own, you may want to file a complaint with a federal or state agency that enforces consumer banking law.  If your complaint involves a Georgia state-chartered bank or credit union, you can file a complaint with the Georgia Department of Banking and Finance (http://dbf.georgia.gov); otherwise, you can contact the Consumer Financial Protection Bureau to file your complaint (http://www.consumerfinance.gov/complaint).

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Can a car dealer or creditor tell my employer I am late on a lease payment?

April 16, 2015 14:12 by Consumer Ed

Dear Consumer Ed: 

I have been leasing a new car for the past seven months.  I was late on a payment for the first time, and someone called my office and told two of my managers that I owe them money. That is absolutely none of my managers’ business.  Not only was that bad business, but was it also illegal?

Consumer Ed says: 

While calling your employer and divulging your private financial information is certainly a distasteful tactic, it may not actually be illegal.  To answer that question, a little more information is needed.  First, it is important to find out who actually called your office.  If it was a third-party debt collector and not your actual creditor, you are likely protected by the Fair Debt Collections Practices Act (“FDCPA”), which prohibits certain kinds of contact, including calls to your employer or other third parties for any reason except to verify your employment and/or your location.  In that case, you should notify the debt collector in writing that you do not wish for the collector to continue contacting you or your employer without your express permission.  If the communications continue, go to www.consumer.ftc.gov and file a complaint with the Federal Trade Commission.

If, however, the phone call came from your actual creditor, and not a third-party debt collector, then you probably would not be protected under the FDCPA.  However, there may be other protections available. For example, if your actual creditor is a bank or other financial institution, there may be other federal protections that would prohibit it from disclosing this information, provided there’s no language in your sales contract permitting it to do so. You should take a look at your loan documents to determine what the agreement says about the creditor’s ability to disclose information, and whether there is any kind of grace period before your account gets sent to collections.  There could be statements allowing or restricting communication to third parties; most such agreements will also specify whether you’re entitled to written notice before your account goes into collections.  If the language of the document permits it, or if your employers are listed on the agreement as either credit references or as sources to provide confirmation about your current employee status, the creditor may have some leeway to call them to inquire about you.


On the other hand, if there was language in the sales agreement that set a specified grace period and the creditor ignored it, and/or if there was nothing in the agreement that implicitly permitted contact with your employer, then the actions could still be considered a violation of Georgia’s Fair Business Practices Act.  To file a complaint, you can contact the Governor’s Office of Consumer Protection at 404-651-8600, or visit our website at www.consumer.ga.gov.

You can also report his behavior to the Better Business Bureau.  Go to www.bbb.org to find your local Better Business Bureau chapter, and follow the prompts if you decide to file a complaint. This will inform other potential customers of these bad business practices and hopefully help end any abusive behavior.

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Why do I have different credit scores?

February 17, 2015 21:42 by Consumer Ed

Dear Consumer Ed:

I recently applied for a $6,000 loan to pay off some credit cards.  When the bank pulled my credit score it was 550, but when I pulled it from TransUnion, it was over 200 points higher. How is that possible?  Which is correct?

Consumer Ed says: 

In the U.S., there are three national credit bureaus (Equifax, Experian and TransUnion), each of which has a credit score for you.  The credit score from each credit reporting organization is based only on the data in your credit report files at that agency.  As a result, your credit score may be different at each of the three main credit reporting agencies.

Often, scores are different because the consumer pulls a score from bureau A, while the bank pulls a score from bureau B.  In your situation, your lender likely didn’t pull your credit score from TransUnion.  The best way to find out where your bank got the score it came up with is to ask which agency’s report it used. 

Making matters even more complicated is the fact that there are actually dozens of different credit scores out there, which weigh various components differently. For example, an insurance company is looking for a consumer’s likelihood to file an insurance claim, whereas a credit card company is interested in how you will handle a higher credit limit. Furthermore, banks and other lenders may customize scores, so even Experian credit reports pulled by two different banks might be different.

When comparing scores across bureaus, keep in mind the following points:

  • The scores should be accessed at the same time.  Credit scores pulled at two distinct points in time will be different.  The longer it is between when two credit reports are generated, the greater the chance that the score will have changed.
  • All of your credit information may not be reported to all three credit bureaus. The information on your credit report is supplied by lenders, collection agencies and court records.  Don't assume that each credit bureau has the identical information pertaining to your credit history.
  • You may have applied for credit under different names (for example, Robert Jones versus Bob Jones) or a maiden name, which may cause fragmented or incomplete files at the credit reporting agencies.  While in most cases, the credit bureaus combine all files accurately under the same person, there are many instances where incomplete files or inaccurate data (Social Security numbers, addresses, etc.) cause one person's information to appear on someone else's credit report. Lenders report credit information to the credit bureaus at different times, often resulting in one agency having more up-to-date information than another.
  • The credit bureaus may record, display or store the same information in different ways.


You should check your credit reports and scores from all three credit bureaus regularly. If you notice that a score has lowered significantly, review your credit report.  If there are unexplainable discrepancies, there’s a possibility that you’ve been the victim of identity theft, or that your report contains inaccurate information.  If you do spot an inaccuracy, contact the applicable credit bureau.  Federal law gives you the right to challenge information on your credit reports.  If the creditor or credit bureau cannot verify the information in question, the credit bureau must remove it from your report.  For more information about how to correct inaccurate information on your credit report, visit www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports.

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