Direct deposit authorization form
Thread poster: Ildiko Santana

Ildiko Santana  Identity Verified
United States
Local time: 16:13
Member (2002)
Hungarian to English
+ ...

MODERATOR
Aug 19, 2013

Dear Colleagues,

I would be very interested in your opinion regarding the opening paragraph of a Direct Deposit Authorization Form I just received from a prospective client:
"I hereby authorize [name of agency] to initiate credit entries and to initiate, in necessary, debit entries and adjustments for any credit entries made in error to my account(s) indicated below and the depository named below, to credit and/or debit the same to such account."

Has anyone seen such curious, two-way arrangement when it comes to direct deposit? I typically accept payment via PayPal or company check, with only a few exceptions (trusted, long-standing clients) who prefer direct bank transfer, but I have never imagined authorizing any client (i.e. the buyer of my translation services) to debit my bank account, for any reason. Would you sign such form? If not, how would you respond?


 

Yolanda Broad  Identity Verified
United States
Local time: 19:13
Member (2000)
French to English
+ ...

MODERATOR
Not a good idea Aug 20, 2013

There are very few people I'd ever authorize to deduct funds from my account, and they're both close relatives. I'm not sure I'd want any old stranger to have the kind of information about my account that would allow them to even make deposits, but maybe I'm too suspicious.

 

Jean Lachaud  Identity Verified
United States
Local time: 19:13
English to French
+ ...
Maybe Aug 20, 2013

I recently received a similar request (most likely from the same agency, which shall remain nameless). I was very unhappy with the wording, but my lawyer assured me that any debit by the customer would be to correct an error, like an overpayment.

 

David Wright  Identity Verified
Austria
Local time: 01:13
German to English
+ ...
I'm rather curious (although this is alas irrelevant here) Aug 20, 2013

Both the asker and one replier seem to imply that they would only rarely or never give a client the information about a bank account to allow the client to make a direct transfer to the account. As far as I am aware, thsi is standard prcedure for paying bills in many western european countries, not just for translators, but everything, from paying the plumber / piano tuner etc. to paying your mortgage.

What actually are your concerns about this?


 

LEXpert  Identity Verified
United States
Local time: 18:13
Member (2008)
Croatian to English
+ ...
Proceed, but be cautious Aug 20, 2013

Yolanda Broad wrote:

There are very few people I'd ever authorize to deduct funds from my account, and they're both close relatives. I'm not sure I'd want any old stranger to have the kind of information about my account that would allow them to even make deposits, but maybe I'm too suspicious.


All the *information* they need is on every check you write - your name, bank name, account no., and routing no. However, they would still need your authorization to actually make the deposits. I have a couple customers who pay by DD, but as far as I know none of them are authorized to make debits from my account. I would be wary of giving such authority. What if there's a dispute and they just decide to take their money back?
Returning accidental DD overpayments is kind of pain, though. Happened to me once, and I ended up sending them a check.


 

Sheila Wilson  Identity Verified
Spain
Local time: 00:13
Member (2007)
English
+ ...
PayPal allow debits Aug 20, 2013

Ildiko Santana wrote:
Has anyone seen such curious, two-way arrangement when it comes to direct deposit? I typically accept payment via PayPal or company check, with only a few exceptions (trusted, long-standing clients) who prefer direct bank transfer

I'm surprised you allow PayPal for anyone and only allow bank transfers for your loyal clients, Ildiko. In fact, PayPal will always allow payers to ask for a return of all moneys paid. All a buyer has to do - within a rather long time limit - is dispute the quality of the goods or services provided with PayPal. My husband has used this to get a refund for purchases once or twice in the past. I've heard the same happen to people here, even when they're not aware of the client having complained. It can be used, fraudulently of course, to obtain a free translation of good quality.

Once someone has your full bank details (a set of numbers, nothing else), they can pay into your account by wire transfer, at least in the UK, the Netherlands, France and Spain, where I've had bank accounts. I've never given my bank authorisation to allow clients to do this - why would anyone be against receiving deposits? There is absolutely no way the bank will allow them to make debits from your account.
I have never imagined authorizing any client (i.e. the buyer of my translation services) to debit my bank account, for any reason. Would you sign such form? If not, how would you respond?

To me, a DD is a Direct Debit, the way most of us pay our service bills (gas, electricity, telecomms...) because it streamlines their processes, and anyway we're given no choice.icon_frown.gif I haven't heard of a DD being a Direct Deposit, but I can't see where the benefit to us is in accepting them. Our clients shouldn't be paying anything until they've received our invoice; only then will they know how much to pay. Maybe the client has an interface which manages the entire process, but it's our right, indeed it's our duty, to check that interface and dispute any errors before they're made. We need to check each and every time that (a) they are intending to pay what is due and (b) they have indeed paid what is due. We have to remain in control of what we invoice for our work, and what we receive. If we're going to do those checks then we are in the best position to refund any overpayments. We should initiate a wire transfer to credit their account.

If a web designer gave you their bank details to pay for your new translation website, and you pay too much, do you expect to be able to debit their account? Or do you ask them politely for a refund? Maybe I don't know enough about the circumstances, but at first sight this seems another case of the lord of the manor laying down the law to his serfs.


 

LEXpert  Identity Verified
United States
Local time: 18:13
Member (2008)
Croatian to English
+ ...
Not how PayPal works... Aug 20, 2013

Sheila Wilson wrote:

I'm surprised you allow PayPal for anyone and only allow bank transfers for your loyal clients, Ildiko. In fact, PayPal will always allow payers to ask for a return of all moneys paid. All a buyer has to do - within a rather long time limit - is dispute the quality of the goods or services provided with PayPal. My husband has used this to get a refund for purchases once or twice in the past. I've heard the same happen to people here, even when they're not aware of the client having complained. It can be used, fraudulently of course, to obtain a free translation of good quality.


Sheila,
PayPal cannot take money from your bank account. They can only take money from your PayPal account. If your PayPal balance is insufficient to cover the amount, PayPal will pay the chargeback out of its own funds and you will owe PayPal the difference. In the meantime, your PayPal balance will negative and your PayPal account will be frozen. Eventually, PayPal will probably institute collection efforts.

The PayPal UA makes is clear that that's the process:
https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US#10. Your Liability - Actions We May Take.

"10.2 Reimbursement for Your Liability. In the event that you are liable for any amounts owed to PayPal, PayPal may immediately remove such amounts from your Balance. If you do not have a Balance that is sufficient to cover your liability, your remaining Balance (if any) will be removed, your Account will have negative Balance up to the amount of your liability, and you will be required to immediately add funds to your Balance to eliminate the negative Balance. If you do not do so, PayPal may engage in collection efforts to recover such amounts from you."

Once you take the funds out of your PP account, PP can sue you for them, but it can't just "take" them.


To me, a DD is a Direct Debit, the way most of us pay our service bills (gas, electricity, telecomms...) because it streamlines their processes, and anyway we're given no choice.icon_frown.gif I haven't heard of a DD being a Direct Deposit, but I can't see where the benefit to us is in accepting them.

Direct Deposit (aka ACH or EFT transfer) in the US are bulk electronic transfers that are inexpensive for the sender because large numbers of outgoing transfers are packaged and sent at the same time. They are common for mid to large sized employers for paying employee salaries, paying vendors, or for government benefit and pension payments. In many cases (government employees, for example) accepting direct deposit for your salary is obligatory if you have a bank account.
The benefit is obviously that you don't have collect the physical check in the mail (or worry about it getting lost) and waste time, gas and car wear-and-tear taking it to the bank to deposit.


 

Sheila Wilson  Identity Verified
Spain
Local time: 00:13
Member (2007)
English
+ ...
@ Rudolf Aug 20, 2013

Rudolf Vedo CT wrote:
PayPal cannot take money from your bank account. They can only take money from your PayPal account. If your PayPal balance is insufficient to cover the amount, PayPal will pay the chargeback out of its own funds and you will owe PayPal the difference.

But that doesn't sound a very satisfactory state of affairs to me, if the translator has delivered a perfectly usable translation.

Direct Deposit (aka ACH or EFT transfer)

Thanks for those alternatives - I know about EFT payments. That's how my salary was always paid by Shell and I can see the benefit of them for employers or pension fund managers.
The benefit is obviously that you don't have collect the physical check in the mail (or worry about it getting lost) and waste time, gas and car wear-and-tear taking it to the bank to deposit.

Well, I suppose that advantage might outweigh the disadvantages of a cheque, so it might be valid in the USA. Certainly not within Europe though.


 

Ildiko Santana  Identity Verified
United States
Local time: 16:13
Member (2002)
Hungarian to English
+ ...

MODERATOR
TOPIC STARTER
Thank you; I will refuse Aug 20, 2013

Thank you for taking the time to share your thoughts and experiences; I appreciate everyone's input. My main concern was not about providing my banking information but granting this company a blanket authorization which would have allowed them to debit my account as they please. The minute I set out to explain to those here who seem to confuse the terms debit and deposit that to *debit* an account means to *withdraw* / to *deduct funds* / to *take* (from me) and not payment (to me), I answered my own question. I cannot allow them to debit my account, period. IF they make a mistake (they should not!), then they can contact me, identifying the specific error and the amount, and IF I agree I can authorize that particular charge and no more. Sure, mistakes happen and there is always the distinct possibility of quality complaint (although it has not happened to me yet in my 20 years freelancing) or overpayment (happened on two occasions, when a client 1. accidentally paid the same invoice twice, first online and then mailed a check, 2. paid in the wrong pay period and asked me for a refund online. In the first case I returned the check with an explanatory note, in the second I authorized the refund of that particular amount, a one-time payment).
Thank you all for helping me find the answer; to authorize any buyer of my services to withdraw from me as they see fit would be silly, to put it mildly.
icon_wink.gif


 

Jenn Mercer  Identity Verified
United States
Local time: 19:13
Member (2009)
French to English
Agree, but it's standard Aug 20, 2013

That particular wording has been on the authorization form from every job that has ever paid me by direct deposit. I agree that I don't like it, but this is the standard wording. Now, it is one thing to give this information to an employer and another to provide it to an outsourcer you have just met. As a freelancer, I prefer PayPal or checks and have only recently started accepted bank transfers.

 

Sarah McDowell  Identity Verified
Canada
Local time: 18:13
Member (2012)
Russian to English
+ ...
It's OK but I would be careful Aug 20, 2013

Ildiko Santana wrote:

Dear Colleagues,

I would be very interested in your opinion regarding the opening paragraph of a Direct Deposit Authorization Form I just received from a prospective client:
"I hereby authorize [name of agency] to initiate credit entries and to initiate, in necessary, debit entries and adjustments for any credit entries made in error to my account(s) indicated below and the depository named below, to credit and/or debit the same to such account."

Has anyone seen such curious, two-way arrangement when it comes to direct deposit? I typically accept payment via PayPal or company check, with only a few exceptions (trusted, long-standing clients) who prefer direct bank transfer, but I have never imagined authorizing any client (i.e. the buyer of my translation services) to debit my bank account, for any reason. Would you sign such form? If not, how would you respond?


Hi Ildiko,

If I were you I would cross out the part about making debit entries to your account. Ask them to adjust the wording of the agreement so that it just allows credits to be made to your account. I suppose they want this option in case they send too much and then need to adjust it. But still, I would just get them to re-write it and then you'll be fine.

I have had clients pay me with direct bank transfer. It's fine and I've never had any problems. However, be sure that you know the fees that will be charged (on the sending and receiving end). Be sure to get them to pay the fees on their end. Some companies pay the fees on both the sending and recipient end but that those were exceptional customers. It should be written into the agreement that they will cover the wire transfer fees on their end.

Sarah


 

LEXpert  Identity Verified
United States
Local time: 18:13
Member (2008)
Croatian to English
+ ...
No fees Aug 20, 2013

Sarah McDowell wrote:

I have had clients pay me with direct bank transfer. It's fine and I've never had any problems. However, be sure that you know the fees that will be charged (on the sending and receiving end). Be sure to get them to pay the fees on their end. Some companies pay the fees on both the sending and recipient end but that those were exceptional customers. It should be written into the agreement that they will cover the wire transfer fees on their end.



In the US, "direct deposits" do not incur fees for the recipient. I received my salary by DD for 13 years, and currently have 4 clients who use to pay me for translations, and I have never been charged any fees. Direct deposits are structured differently from classic wire transfers and the two should not be confused.


 

Sarah McDowell  Identity Verified
Canada
Local time: 18:13
Member (2012)
Russian to English
+ ...
I was thinking of wire transfers Aug 21, 2013

Rudolf Vedo CT wrote:

Sarah McDowell wrote:

I have had clients pay me with direct bank transfer. It's fine and I've never had any problems. However, be sure that you know the fees that will be charged (on the sending and receiving end). Be sure to get them to pay the fees on their end. Some companies pay the fees on both the sending and recipient end but that those were exceptional customers. It should be written into the agreement that they will cover the wire transfer fees on their end.



In the US, "direct deposits" do not incur fees for the recipient. I received my salary by DD for 13 years, and currently have 4 clients who use to pay me for translations, and I have never been charged any fees. Direct deposits are structured differently from classic wire transfers and the two should not be confused.


Hi Rudolf,

I must have got confused with wire transfers vs. direct deposits. Yes, I know that direct deposits don't have fees. But receiving a wire transfer does - for me there is a $10 fee to receive an international wire transfer. This fee varies depending on which bank you use.


 

Ildiko Santana  Identity Verified
United States
Local time: 16:13
Member (2002)
Hungarian to English
+ ...

MODERATOR
TOPIC STARTER
@ Sarah Aug 21, 2013

Sarah McDowell wrote:

If I were you I would cross out the part about making debit entries to your account. Ask them to adjust the wording of the agreement so that it just allows credits to be made to your account.


I was thinking of doing exactly that, even if it means they won't contract me in the end.
Thank you, Sarah!


 

John Fossey  Identity Verified
Canada
Local time: 19:13
Member (2008)
French to English
Direct deposit Aug 21, 2013

Direct deposits are pretty safe. As someone else mentioned, the only debits would be to correct an erroneous credit and they would have to convince their bank or provider that this is the case. Abuse of this would lead to the depositor losing their right to make direct deposits, not only for the account in question but probably to use the feature at all. I have several clients who pay by direct deposit, generally through an external firm that specializes in it such as ADP (Automatic Data Processing). I've never had a problem with it - it's part of the way the banking system operates. I think the contract is likely an industry standard.

Wire transfers are completely different from direct deposits.

[Edited at 2013-08-21 20:43 GMT]


 


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