I have one business account that is in the red (has been for more than a month) and one personal account that is in the black. I had money put into the personal bank account and the bank immediately transfered it into the one that is in the red without asking me. Is this legal or allowed? Is there going to be a section in the terms of service? Is there someone or some government body/website where I can find out more about this?
2007-07-13 07:44:58 · 8 answers · asked by lfcmedia1 1 in Business & Finance ➔ Personal Finance
I work in a bank, and yes, what they did was totally legal. It's called "Right to Offset." Basically, if one of your accounts is overdrawn for more than 30 days, if you have another account with your name on it, even if you have never deposited one dime into that account, the bank can transfer those funds into the overdrawn account to collect the funds. So yes, it is legal. Ethical though, not really.
2007-07-13 09:27:01 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The only way they can do this is if your accounts are linked and they are in the same bank. For example savings and checking - somewhere in all of that fine print - its in there. That they will take from the positive account to pay on the negative account or they will take out the bounce check fees out of your savings account etc. The only way that they won't do this is if there is a positive account in one bank and you have a negative account at another bank they won't call and ask them to send them any money.
2007-07-13 07:57:02 · answer #2 · answered by justaboutpeace 4 · 0⤊ 0⤋
Depends on what type of business you are (sole prop, LLC, etc.) If you are the guarantor for the business account, then the bank has the "right of offset" just as the other user mentioned and it is perfectly legal.
Why was your business account overdrawn? Talk to your banker. Many times these issues can be fixed with a visit to your banker. If you are overdrawn in your account, it may be time for a financial check-up from your banker anyhow. Might as well kill two birds with one stone.
Good luck.
2007-07-15 05:53:26 · answer #3 · answered by Corporate Banker 2 · 0⤊ 0⤋
Call the bank and talk to a manager, but I'll bet you find in the small print of the account setup paperwork that it states that they have the right to do that. Probably when you opened the business account, you personally 'vouched' for it, meaning you are personal guarantor - so they have the right to cover funds in both accounts.
2007-07-13 07:53:25 · answer #4 · answered by fuffernut 5 · 0⤊ 0⤋
By "in the red" you mean "overdrawn" -- which means you owe the bank money.
Yes, they can transfer money into the account that you owe them money on. Additionally, they can and will charge you overdraft fees, and might even charge you for the inconvenience of having to transfer the money into the overdrawn account.
If they couldn't, they wouldn't have.
2007-07-13 07:58:00 · answer #5 · answered by kelannde 6 · 0⤊ 0⤋
No. Are you sure that you didn't give them permission? In the account opening documents, was there language like "all accounts in the bank serve as collateral for all other accounts" or something similar? (There usually is.) This was your permission for them to cover themselves in this way.
2007-07-13 07:56:43 · answer #6 · answered by Ted 7 · 0⤊ 0⤋
You need to read all of the information they gave you when you set up the accounts and also their terms and conditions. If you did not sign anything authorizing transfers to other accounts then no they can not do it....unless its in paperwork that you signed stating they can.
2007-07-13 07:53:19 · answer #7 · answered by Lauras78 2 · 0⤊ 0⤋
you need to call your bank and findout.
2007-07-13 07:47:43 · answer #8 · answered by Gengis 6 · 0⤊ 0⤋