Oops! How Does One Undo Payment Mistakes?
I speak to users of payment apps about their experience, and they assure me they are very careful and are confident they are always paying the right person the correct amount. While I don’t use Venmo myself (yet), I have watched the demos and watched my kids use it. I like the functionality, and I understand that 99.9% of the time, you are paying funds to or requesting funds from one of your contacts, which explains users’ confidence. (For the life of me I don’t understand why anyone wants to share payment information on social media, but I am a boomer, and many social media trends baffle me.)
But what if you are sending money to someone for the first time, and you make a typo in the contact information you enter, and you end up sending money to the wrong person? There is no “undo” button! This issue came to my attention in the last few weeks listening to Elah Feder, a journalist, who made just this mistake. The story was the focus of a Planet Money Episode. And Ms. Feder was also interviewed on NPR. If you have time for the Planet Money Episode (about 20 minutes), you get a real sense of the frustration. It is a a real cautionary tale. The interview is under four minutes. Either would be a good introduction to a lesson on payment methods.
The bottom line is that, in all likelihood, if you make such a mistake and send money to the wrong person, you will have to rely on the integrity of that total stranger. There is no Venmo customer service to come to your assistance. The only chance you have to recover your funds would be in the window between sending the funds and the funds being accepted, where you could ask your bank to stop the payment (which will cost you a fee), just like you would request a stop payment on a check. (We are assuming that your Venmo account is attached to your debit card/checking account.)
After listening to this podcast or the interview, it might be a good time to follow-up with a comparison of how to handle mistakes with other payment methods. Here is a summary for you:
What about PayPal? (PayPal is the owner of Venmo, by the way.) Once a payment has been accepted, you are at the mercy of the recipient, just like with Venmo. However, if the payment has been made but NOT claimed, you can cancel the payment through your PayPal account. You don’t have to go through your bank and pay to cancel the payment.
Credit Cards (and Debit Cards)
Credit cards are the easiest in terms of disputing errors, getting credit for goods ordered and not received, or getting credit for receipt of faulty or falsely advertised goods. You simply log into your account or call the credit card’s customer service phone number and register your dispute. Usually, the amount in dispute is removed from your balance immediately, although temporarily, while the credit card company researches your dispute. If they find you are correct, the charge is removed permanently.
If you dispute a charge made using your debit card, you will have to investigate the process your bank requires. Not all banks have the same rules. But here are some basics (this link is for both credit and debit cards). Bottom line here is that if, when asked “debit or credit” you say “credit” when you pay with your debit card and “sign” for what you receive, your bank has to treat your dispute as the company whose logo is on your card would handle it (Visa or MasterCard). So remember that you will have more luck and are better protected if you “signed” for the purchase than if you type in your PIN.
Either way, banks will likely have you fill out a form with information about the purchase or charge and your problem with it, and they will contact the merchant’s bank. Each bank handles the amount in question differently while the amount is in dispute. It can take anywhere from 30-45 days to resolve the dispute (and if you lose the dispute, you won’t get the money back.)
Remember that this process if meant for actual mistakes, not because you are unhappy with your purchase or changed your mind. Your case will be stronger if you provide evidence/proof of the error. CreditCards.com recommends no matter how you made the purchase in question, you should start by calling the vendor. They usually want to keep the customer happy. And if you do all you are supposed to do and still “lose” the case with your bank, look to the CFPB for more help.
About the Author
Beth Tallman entered the working world armed with an M.B.A. in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducting student workshops, and developing finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.
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