Wednesday, October 6, 2010

Sunk Cost

I don't give up easily. Often this is costly.

We're probably the only household in Canada that has their VISA setup with Pre-Authorized Debit (PAD) from a savings account.

On the one hand, I can't see why everyone doesn't do this. Being unconcerned about some nebulous superpower plotting my destruction via perfect knowledge of my purchasing patterns, I buy almost everything on VISA. It's convenient, insured, and allows me to track our spending patterns. The problem is that once a month you have to pay the damn thing. Wouldn't it be nice if it would just reach into your bank account and pay itself, thereby guaranteeing that you never pay a dime in interest? Well it can, and mine does. It's called Pre-Authorized Debit.

But if all your purchases are on VISA and it is going to pay itself monthly, then that's going to be a fairly large bill, so you'll have to have a fairly large pot of cash somewhere, and it's in your interest (pardon the pun) for that to be a savings account. Aye, there's the rub.

The fact is, that the only information a Bank needs to pluck money from your account is: Transit Number, Institution Number, Account Number.

cheque transit number

The rest, like your name and address, and the bank's name and address probably aren't necessary. And any security features built into the cheque are lost when sent by fax, so they're irrelevant. This means that knowledge of your account number is all that is necessary to steal your money. It's really only the paper trail that protects you.

Anyway, a couple of years ago after many faxes and phone calls and much suffering, I arm-twisted my bank into setting up PAD from a 3rd party savings account. This bank (that issued the visa) had advertised PAD on their website, and I had confirmed with them that this was possible, and in fact switched to them from my previous bank (who later claimed to be able to do the same thing) all for the purpose of setting up this "effortless" PAD system, so when they gave me the run-around while setting up the PAD I just bore down until they gave way.

Fast-forward to last month, for which my memory is more accurate, and I'll lay out for you the road of suffering and woe that is required to accomplish VISA Pre-Authorized Debit from a 3rd party financial institution's savings account. In this case, I already have PAD setup, but want to redirect it to a different account in the same organization for which it is currently successfully setup. You'd think that would make it easy.

Sept. 7th 2010 -- Search around on the bank's website for the PAD form. Notice that the fax number on the form itself and the fax number on the page that links to the form are different. Phone VISA. After ~10 min wait, get off-shore call centre. Asserts that it is the on-form fax number that is correct. Send fax.

Sept. 16th 2010 -- PAD came from the old account. Phone VISA. After ~10 min wait, get off-shore call centre. Ask why my fax was ignored. Am on and off hold several times. Total call length ~25mins. Tells me to call a different 1-800 number, which in fact turns out to be the same number I dialed to get him. I didn't realize this because it was spelled partly in letters on the back of my visa whereas he read it to me only in numbers. Unbelievable.

Sept. 16th 2010 -- Call right back. Another ~10min wait. Got someone useful this time. She asserts that the first guy was wrong. I should use the on-web fax number, not the on-form fax number.

Sept. 21st 2010 -- Got a phone message stating that the form could not be processed without a void cheque. But right on the form it says: "You must include a 'VOID' cheque for a Chequing Account or the top portion of your statement for a Savings Account." There's even a Chequing/Savings selection box on the form. Obviously a savings account cannot provide a void cheque. P.S. I did correctly fill out the form and did include the statement from the savings account. So I call them back. Another ~10min wait. Explain the situation. Am on and off hold for a long time. Guy asserts that they have the fax and it's no problem. It will be debited from the new account at next billing.

Sept. ~30th 2010 -- My faxed form arrives in the mail. Says it was rejected due to "non-receipt of void cheque".

Oct. 5th 2010 -- Call back regarding the letter, just to be sure it will be debited from the correct account. After the usual wait and long explanation, the guy confirms that it has not been updated and will still come from the old account. This directly contradicts the last guy. Great. What to do? He says, go to your local branch. They'll be able to process it "right before your eyes".

Oct. 6th 2010 -- Arrive at local branch. They have no idea what VISA expects them to do. They call someone and suggest that my 3rd party bank needs to provide a PAD form. It might contain some extra information (secret numbers). Fine. Drive back home. Call my savings-account bank. No such form exists. No secret numbers exist. There is a direct-deposit form, but it just has institution, transit and account numbers. Just like a cheque. Just like VISA's PAD form. Call VISA again. Have a long talk. No he can't see my fax, that goes to the "back office". No there is no way to call the "back office". I should go to my local branch. Back at the branch, they get on the phone again. After a long wait (~25min) she says that she talked to a supervisor and he promised to process the form. She'll re-fax it to him.

I hope it works.

P.S. It would have been a simple matter to photo-shop a fake cheque and fax it in. I really don't see what the big deal is. The fundamental problem is that the system is setup to prevent direct communication between the person who submits the form and the person who processes it.

Update: Oct. 14th 2010 -- Called VISA again to see if they had updated the account number. Nope. Got an on-shore call centre this time. Explained that I was in a branch on Oct. 6th and that they promised to fix it. Was put on hold for ~10min. She came back and said she talked to a manager and that it would definitely be fixed before the next auto-payment (in four days).

Update: Oct. 20th 2010 -- Success.

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