Direct Deposit Reversal Timeline

[amit.gupta1]

What is the name of your state? Illinois

Hello,

I read on another thread that under Federal Regulation E, an employer only has "5 banking days" in which to reverse a direct deposit. After this 5-day period, it is my understanding that the employer no longer has any authority to reverse a deposit.

Questions:

1) I have read Federal Regulation E as well as the Electronic Funds Transfer Act online and could not confirm for myself the 5-day reversal timeline. Could anyone please direct me to the website/link that states this explicitly?

2) Is this 5-day reversal timeline applicable for all states including Illinois? I am assuming so since Federal Regulations usually trump state legislation.

3) Could someone also please define what constitutes a "banking day"? For example, my bank (Citibank) has its branches open from Monday through Saturday and limited hours on Sunday as well. Does banking day = business day only?

Does the fact that I have closed the checking account to which I gave my employer direct deposit authorization have any bearing on the 5-day reversal timeline? The employer has not contacted me yet about a reversal of their deposit made on 1/5/07, despite the account closure completed on 1/9/07.

Thanks for your help!

 

[seniorjudge]

What is your legal question for us?

 

[Gadfly]

So it sounds like you changed bank accounts without taking steps to make sure that your employer had ample time to change what to do with your money ( and maybe didn't even tell them in writing that a change was needed). Am I getting close? What's that have to do with anything on this site.

 

[pattytx]

It's in here (somewhere):

2(d) Business day

This paragraph defining business day is unchanged.
The act and regulation define business day as any day on which the
offices of the consumer's financial institution are open to the public
for carrying on substantially all business functions. This requires
that each financial institution determine when its offices are
``carrying on substantially all business functions.'' The Board
proposed to use its authority under section 904(c) of the EFTA to
change the definition to mirror the definitions used in Regulations CC
(12 CFR part 229) and DD (12 CFR part 230). Those regulations define a
business day as a calendar day other than a Saturday, Sunday, or any
legal public holiday specified in 5 U.S.C. 6103(a).

http://www.fdic.gov/news/news/financial/1996/fil9631a.html

If the account is closed, it's closed. You can't get blood from a turnip. What is the real issue here? Were you overpaid and trying to get out of repaying?

 

[moburkes]

That's my thought. Just because they can't REVERSE the direct deposit doesn't mean that they can't get their money back. It begins with a lawsuit. It ends with you changing banks weekly so as not to be caught.

 

[amit.gupta1]

The real issue here is that I left my employer on 11/28/06 and they direct deposited ~$3700 into my account for salary, expense reimbursement, etc. on 12/29/06. According to my own calculations, $3700 is the correct amount that is owed to me. 6 days later on 1/3/07, my employer reversed the $3700 direct deposit without written or oral notice to me. Fine, I understand they have a right to do reversals, but the time they took to do it is my "legal question".

A day later, I spoke with them on the phone and they said they would be direct depositing a different amount ($1500) into my account. $1500, they feel, is the correct amount because they are excluding the severance pay promised, restating their own exchange rates from my expense reports that are months old now, etc. On 1/5/07, I checked my account and they AGAIN deposited the exact same $3700 that they acknowledged was incorrect and had previously reversed. Since I believe $3700 is correct and because history tells me they will try to reverse the deposit again, I have closed my account to prevent this. My reason for doing this is so they will work with me to resolve the discrepancy in the amount owed to me. My fear is they'd ignore me after paying their $1500. At least this way, they are forced to work with me one-on-one to resolve the discrepancy.

However, it would be much easier to avoid resolution if the law prevents them from reversing the initial $3700 direct deposit in the first place. Since the amount is correct in my view, I could just tell them that the time limit for direct deposit reversal is 5 business days. Since they reversed it in 6 days (12/29/06 - 1/3/07), I could cite the law and prevent them from trying to reverse the $3700 yet again. That's my theory anyway? Any opinions or advice on my course of action? Is there a better way?

 

[seniorjudge]

Q: Any opinions or advice on my course of action?

A: Sue them in small claims court for the actual and direct dollar amount of damages you think you suffered.

 

[mlane58]

Well if you had explained the portion about severance and expenses before you would have gotten an entirley different answer. Unless you had a bona fide contract or were part of a collective bargaining unit, the employer isn't obligated to pay you a severance or business expenses even if they promised you. So with that said, you will most likley find yourself in small claims court and expect to be repaying the amount in question.

 

[moburkes]

Well if you had explained the portion about severance and expenses before you would have gotten an entirley different answer. Unless you had a bona fide contract or were part of a collective bargaining unit, the employer isn't obligated to pay you a severance or business expenses even if they promised you. So with that said, you will most likley find yourself in small claims court and expect to be repaying the amount in question.

And don't forget: Changing bank accounts every week.