For a Few, Automatic Bill-Paying Has a Dark Side

Electronic billing arrangements--automatic debits from checking accounts, authorizing a payment by phone or via the Internet--work well most of the time. But what happens when they don’t?

That issue arose recently at a provider of the most basic sort of service, the Los Angeles Department of Water and Power.

A glitch in automatic payment systems handled by the private firm CheckFree and Wells Fargo Bank resulted, the DWP says, in 540 residential customers (out of the DWP’s 1.2 million) not being credited with their payments for three weeks or more.

And five of those customers, according to DWP officials, actually had their power turned off briefly for nonpayment.

Since the DWP has 82,000 of its customers paying automatically, this means that one out every 152 on this occasion experienced an irregularity in payments credited, and one in 16,400 lost power.

Not large numbers, but still mighty inconvenient and annoying for those caught in the snafu.

And this is pertinent, because in the U.S., as compared with Europe, people have been resistant to making electronic payments. At the DWP, they represent only 6.8% of all remittances, and at the Southern California Gas Co., 5.6%, despite the utilities’ efforts to promote such arrangements.

I heard about this particular problem from a Westwood advertising man who was one of the five who lost power. He asked not to be identified for reasons of privacy, but did allow me to use his name with the DWP, the bank and CheckFree to verify the incident.

The man called me earlier this month in an agitated state. It was a cold day, he had come home to find his power off, and he wasn’t at all confident that the DWP would turn it back on by 5 p.m., as a supervisor already had promised.

His power was restored by 5, and now his account is in order. Indeed, all the accounts affected have been put right.

But what did go wrong here?

It frequently happens with this column that one call, one complaint, when explored in depth, turns out to be a problem that affects many people.

All the man knew when he called me was that for 4 1/2 years he had used CheckFree to pay his bills and this was the first time anything had gone awry.

He added that he had confirmed that his $130 payment to the DWP had been deducted from his checking account at Wells Fargo.

So he was surprised when he returned home one day to find a DWP notice taped to his door that if he didn’t pay his bill that day, his power would be cut off.

“I called DWP customer service,” he related, “and I spoke with a woman. . . . When I insisted I had paid the bill, she said, ‘We will not do anything until we call you.’ ”

But the man’s power was turned off without further notice, and when he contacted a supervisor, he says that man remarked, “I’m not responsible for what anybody else here says.”

So why hadn’t all these payments been recorded?

Roger Chang, a revenue manager at the DWP’s executive office in Sun Valley, said that after being informed Dec. 8 by Wells Fargo, which handles CheckFree payments for the DWP, that payments totaling $93,553 had not been reconciled with individual remittances, the DWP looked exhaustively into the matter.

“CheckFree left off a digit in the bank identification number when it sent its file of payments to Wells Fargo, and accordingly, some information on individual payments never reached us,” he said.

Chang said this would have been caught immediately had DWP been doing a daily reconciliation of accounts with Wells Fargo, but it was only doing so monthly.

Now, he said, it will do it daily, which “may cost us $12 a day, but we’re asking Wells Fargo as a volume customer to do it for free.”

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As to whether the man should have been notified again before his power was turned off, Chang first remarked, “Once in a great while, we do a callback.”

Later, however, he said the turnoff was a mistake by a DWP employee who misread an order.

Chang said the DWP will send the man “a $25 public-relations credit, plus a formal apology.”

At CheckFree headquarters in Norcross, Ga., Terrie O’Hanlon, a senior vice president, said that while creating a new remittance system, “we believe there was a human error in moving our old information to the new processor.”

Had anyone called CheckFree and said a payment had not gone through, “we would have been able to track it very quickly and resolve the situation,” she said.

Of 10 million payments made by 2.5 million CheckFree customers monthly, fewer than 0.5%, or fewer than 12,500, of the customers even raise a question about the process, O’Hanlon said.

But, she added, if a late fee is charged a customer for a payment not remitted in a timely fashion, CheckFree pays it.

Kathleen Shilkret, a spokeswoman for Wells Fargo, said it was actually specialists working for the bank who first discovered that CheckFree had “dropped a digit off L.A. DWP’s account number.”

Richard O’Reilly, director of computer analysis for The Times, observed that what took place was a data entry error, not a more serious programming error that might have affected thousands, not hundreds, of customers.

“It’s not shocking,” he said. “Errors do happen, although a lot of people assume, when they sign up with these systems, that everything will be perfect from then on.”

Noting that since June the DWP has had its own direct automatic payment system, I suggested to the man who had called me that maybe if he used that it might minimize the chances of an error, since there would only be two parties in the transaction rather than four.

He wouldn’t do it, he replied. He said he enjoys having all his bills paid by one service he can access on the Internet.

But convenience, at least of the electronic variety, obviously has its risks.

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Ken Reich can be contacted with your accounts of true consumer adventure at (213) 237-7060, or by e-mail at ken.reich@latimes.com