The money that you deposit into your bank account belongs to you, and typically you and the other account signers are the only people who are authorized to take money from your account. You can give your bank the authority to take money out of your account to pay bills or set up automatic drafts. However, in some situations, your bank can take money from your bank account without your consent.
When you open a bank account you receive a copy of the depository agreement that includes a service fee schedule. This document includes an extensive list of scenarios in which your bank can assess fees against your account and automatically debit money from your account to cover those fees. You incur fees when you overdraw your account, deposit a bad check and at some banks you also incur a fee when you fail to keep a minimum balance in your account. Your bank does not have to notify you before it assesses a fee, but it does have to provide you with the fee schedule when you establish your account.
Right of Offset
If you fail to make a payment on a loan or overdraw a deposit account and fail to make a deposit to bring your balance back into the positive, your bank can debit your other deposit accounts to settle the debt. So-called "Right of Offset" laws vary from state to state, but at the federal level, rules exist that prevent your bank from using the right of offset to collect payment on a credit card. Banks can only use the right of offset internally and a bank cannot debit an account held at another institution under this law.
Business owners and account holders who accept credit and debit card payments have to contend with chargebacks. A chargeback occurs when a customer disputes a credit or debit card charge that you processed through your point-of-sale terminal. Your bank debits your account for the amount of the disputed item and returns the money to the cardholder's bank. A chargeback can occur if someone other than the cardholder actually made the purchase. Chargebacks can also occur if you fail to deliver an item to a customer as promised or when a dissatisfied customer returns an item or can prove that the item was never received. A chargeback can occur months after you process a payment.
Your bank must debit your account if it receives a court order to do so. This occurs when a creditor or a government entity, such as the Internal Revenue Service, obtains a court order to garnish your account as a way of forcing you to settle a debt. The bank has no option but to comply with the garnishment order and must send funds directly to the entity that filed the garnishment request. You should receive written notification of garnishments but you may not receive this notice until funds have been debited.
- Comptroller of the Currency Administrator of National Banks: Answers About the Right of Offset
- "Bankrate.com"; Creditors Can garnish Bank Accounts; Justin Harelik; November 2006
- Wells Fargo: Chargeback Prevention Tips
- Comptroller of the Currency Administrator of National Banks: Answers About Overdraft Fees and Protection
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