My mother in law does not check her bank statement each month. Recently I looked at her statment for her and found a suspicious charge for $14. After doing a little investigation, I discovered that the charge was for a gym membership. My mother in law does not belong to a gym, nor has she ever set foot in one. After doing further investigation, I found that the gym has been withdrawing $14 per month from her account since 1987! The bank has no records of the original authorization, nor does the gym. My mother in law adamantly denies having ever contracted with the gym. Is there anything that can be done through the bank? Wouldn't the bank need to keep some proof of authorization for the withdrawal?

Whether the withdrawal is made using a piece of paper (called a demand draft) or it is made electronically, the applicable rules assume that consumers review their periodic statements for accuracy. In general, if it is a paper item, then the consumer has one year to draw it to the bank's attention. If it is electronic, then the consumer has 60 days to draw it to the bank's attention.

However, regardless of the medium used, the time frame began to run when the first debit appeared on her statement back in 1987.

In essence, the responsibility for reviewing her bank statement and the attendant loss from failing to do so is your mother-in-law's. She was in the best position to determine if the charges were appropriate.

No, the gym would be the party responsible. Their bank requires them to comply with ACH rules, which include retention of the authorization (or it should, anyways).

This could be interesting. My take on this is that the gym is required to retain the original authorization for a period of 7 years from the date of inception (although others may state they must maintain for 7 years after the last item). This has been going on for 18 years, so chances are the original forms are gone. Secondly, your MIL can dispute anything within the past 60 days, and claim unauthorized, and the bank must return. The clock starts with each payment, not just at inception as anonymous stated above.

You are looking at a total of about $3,000 in unauthorized transactions over the past 18 years, and the cost of an attorney to pursue this would probably be more than what your MIL could recoup. If you have a local action reporter for TV, radio, or newspaper, a call to them may get some prompting from the health club to reimburse. No one wants dab press these days.

Two questions - has your MIL learned to read her statement? And, where can you join a gym for $14 per month? They run at least $35 here!!!

Well, I hope your mother-in-law banks at Happy's bank. He's going to give you $28 back when no one else would:

(i) Is received by the institution no later than 60 days after the institution sends the periodic statement ... on which the alleged error is first reflected;

He really is a sweet guy. Everybody says so.

I'd suggest you read page OR91, return reason code R10...the RDFI has been notified by its customer, the receiver, that the originator of a given transaction has not been authorized to debit his account. The receiver may request immediate credit form the RDFI for an unauthorized debit. The request must be made in writing within 15 days after the RDFI sends or makes available to the receiver information pertaining to that debit entry...

In the ACH environment, each transaction has the ability to be returned in and by itself, not from the date of the original (first ever) payment, but from the point it was done. And I'd probably go to bat for my customer and work to get the rest of it back as well.

Post deleted by Michele Petry

I'm not sure where anon is coming from. The NACHA rules are pretty clear (as is Reg E).

Now that they are aware of unauthorized transactions, I think it's in the banks best interest to return what they can...within 60 days. The MIL would have to work with the gym company for the other charges.

If the charges within 60 days can be returned, the ODFI is prohibited to send future unless they receive new authorization. So, you can help the customer in that way.

But I agree with Happy, I would still go to bat for my customer. I mean, if the gym doesn't have the authorization now, you can make the argument that they never did. And since they can't prove that they ever got proper authorization, then they should pay back those funds. But the fact that the MIL never checked her statement (ouch!!), could be the determination here.

Post deleted by Michele Petry

Post deleted by Michele Petry

Surprised, but not really, the MIL has her bank statements from 1987? Wow! What else has been going on that has never been caught. MIL needs someone to look into her accoount on a regular basis.

The quote about the 60 days is from Reg E.

So, if the customer signs a statement (under penalties of perjury) that says the first unauthorized transfer occurred in 1987, you would turn her down. However, if she signs a statement that says the first unauthorized transfer took place 60 days ago you would refund her the $28 and help her to try to get her money back from the gym.

Please explain what you think the gym's attorney will do with a copy of her statement, signed under penalties of perjury, that says the first unauthorized transfer took place 60 days ago? Don't you think that kind of sort of maybe, they would turn her down for the balance of her claim because she had signed a statement indicating her claim did not go back to 1987?

Please, don't help her. She's better off without you.

And herein lies the issue...my reading on both Reg E and the NACHA rules is that each and every transaction, in itself, is a new transacation. You are reading that the first one is new and each subsequent transaction isn't. You're entitled to your opinion, I'm entitled to mine. I've won every disputed item that I've fought for using this very same scenario.

I think the gym's attorney (should they even have one) is going to be less versed on banking laws and regulations than mine, and would recommend that the gym makes the customer whole. It has happened every time. No business needs bad publicity.

As bankers, we have a duty to assist our customers, even when they don't help themselves. You should remember that.

Sorry, anon, I'm with Happy on this one.

I think it's in the best interest of the bank to do absolutely everything possible for it's customer.

If the gym has no authorization on file, then is it possible that they never had one to begin with? Is it possible that they transposed an account number and the true person never said anything as they have gotten a 'free' gym membership? That same person also could quit their gym membership just as easily because they don't have to worry about fees and charges, correct?

Whether the gym needs to make her whole completely, I don't know (although there is a good argument to do so- I mean, if you are continuing to auto deduct someone, wouldn't you still want the autho on file? Isn't that good business practice or better yet REASONABLE?)

I think you have to do what you can. Period. To not do anything is a disservice to the customer.