(This mentioned briefly before, but I thought of a new twist.)

Do you have direct deposit of your paycheck into a bank account? According to Clark Howard (consumer advocate radio show talk host), if you have direct deposit, that gives permission to your employer to LOOT your account of ANY AMOUNT, not just a recent or disputed deposit.

He stated on the radio that the Federal Reserve is "silent" on the manner -- that this is not something they're concerned with. The "Direct Deposit Association" says not true, but the actual BANKS say yes it IS true.

Like with Y2K itself, prudence would dictate your CYA. Opt out of direct deposit NOW. If you do not have the option of opting out (your employer forces you), make sure you hotfoot it to the bank where your automatic deposit account is, and either get cash, or at least transfer the funds to another account, preferably in another bank.

Where the Y2K twist comes in -- suppose your employer feels the need to do a little Y2K prep (personal or business) with YOUR money. That might not make your day.

-- A (A@AisA.com), November 01, 1999

Answers

If you can't get out of direct deposit, DO NOT use the account to pay bills. Withdraw cash, and pay by cash or money order, or at least transfer funds to another account and use that for bill paying.

Howard covered this several weeks ago, and his coverage today was the case of a part-time worker who supposedly was credited and had paid into her account an erroneouse amount of vacation pay. So, she went ahead and wrote a bunch of checks on what she thought was her balance. Then the company came in and took the money back. Then all her checks bounced, costing her the (typically outrageous) bounce fee on each check.

Got cash? Withdraw early and withdraw often.

-- A (A@AisA.com), November 01, 1999.

Let me see if I understand this:

Someone got paid an erroneous amount. The payee had so little idea what the balance on their account ought to be that they wrote "lots of checks" which were in fact not covered. I infer from that information

When the amount got corrected, the checks bounced and the payee ended up owing NSF charges on the checks.

Whether it's college or the school of hard knocks, education is expensive. Today's lesson was: Balance Your Checkbook

*sheesh*

-- Mac (sneak@lurk.hid), November 01, 1999.

Mac -- no, she wrote checks against what was the balance after her employer deposited the check. Then the employer TOOK IT BACK, making her balance sufficiently low that checks she wrote then bounced. Not her fault -- it was the company tapping her account that triggerd the overdrafts.

BTW, here'es the latest banking scam to maximize overdraft charges (ODC), no matter whether it's you or your employer pulling too much money out. Say, for example, you have two little checks and one big check hit the bank at the same day. Say you have enough to clear the two little checks combined, but not all three. And you don't have enough to clear the big check. What they do is bounce the big check. Ding! One ODC. Then, naturally the two little ones also bounce. Ding! Two more ODC for a total of three ODC. Whereas, if they cleared the two little ones, then there would be only one ODC (on the big check.) Bottom line Ding! They scammed two additional ODC out of you.

NOTICE: Your employer could LOOT your bank account tomorrow! It makes no difference whether or not there is any amount at dispute, and even if there is a dispute, they are not limited to withdrawing only the amount at dispute.

Now, say it would take you several months to get it straighted out, even maybe necessitating a suit. One little problem: 2000-01-01 will arrive sooner (less than two months, now) than "several" months. 'Nuff said.

-- A (A@AisA.com), November 01, 1999.

Here's a real life example:

PHILA SCHOOL DISTRICT TAKES SOME PAY BACK

Employees say personal bank accounts tapped into by payroll system

More than 200 school employees have learned that what the School District giveth, the School District also taketh away.

The workers' paychecks were electronically deposited into their bank accounts on Oct. 15. But three days later, as the Daily News began reporting disastrous problems with the district's new $26 million computer system, the School District reached back into its workers' bank accounts and took back the money - no warning, no explanation ...

http://www.phillynews.com/daily_news/99/Oct/27/local/SKUL27.htm

If above link is outdated, copy is here: http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001fu4

-- Cheryl (Transplant@Oregon.com), November 01, 1999.

Cheryl -- good example. Nationwide.

All: This IS a big deal -- I've heard two examples on Howard's radio show, and in my area it's only on an hour a day, and I don't get a chance to listen to it very often. So with the limited amount of time that I've heard his program, to have covered the same topic within a space of a few weeks says something.

BTW, he has a web site
http://www.accessatlanta.com/partners/clarkhoward/

-- A (A@AisA.com), November 01, 1999.

Unfortunately some of us can't get out now that we're in. You know, I think it was one of those *harmless* executive orders that made electronic fund transfer mandatory for the government. Looks like this area is ripe for abuse, read *child support, back taxes, liens, legal judgements, etc.*. Wonderful. They take it up front and you have to fight to get it back.

-- wondering (wondering@notoo.far), November 01, 1999.

Wondering -- all you can do in that case is to hot-foot it down to the bank (or maybe have some sort of electronic transfer) to empty that account the day your check is credited, into cash or another account. And don't write checks for bills or toys out of that account.

-- A (A@AisA.com), November 02, 1999.

.'

-- z (z@z.z), November 02, 1999.