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About Debiting Accounts
I was informed that if a person or company is debiting your checking account they can only debit the account you authorize and not any amount, is this correct?
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 That's essentially correct. Consumers are protected by the Electronic Fund Transfer Act and Regulation E. There are also protections built into the Automated Clearinghouse (ACH) rules that form the contract between parties that create and settle electronic transactions through the automated clearinghouse network. Finally, there are Federal Trade Commission and other rules protecting consumers against unauthorized transactions in their accounts.
When a consumer provides an authorization to a third party to debit the consumer's account, that authorization is specific as to timing, the party to be paid, and the dollar amount. Some authorizations are for a series of transactions (e.g., an authorization for debits for insurance premiums or for a health club membership) and some may provide for varying amounts (e.g., an authorization to have monthly utility bills automatically debited from an account).
When a series of debits is authorized and the amounts can vary, the authorization may provide for a range of dollar amounts, or may simply call for a billing notice to be sent at least ten days before the charge will be made to the account, which affords the consumer time to plan for the charge or to stop it and make other arrangements for payment. In some cases, consumers have approved a charge and also authorized subsequent charges or shipments of goods, sometimes unknowingly. Particularly when providing an OK by telephone or over the Internet to have one's account charged for a specific amount, it is critical that one pay attention to the possibility that subsequent transactions might follow. Many consumers have fallen prey to apparent scams that bury the authorization for later transactions in the script that is read rapidly to the consumer or in small print on a webpage.
Published on BankingQuestions.com 5/28/09
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