What an ACH debit or a pre-authorized debit means

Who is pulling the money

In the United States, this transfer is often labeled ACH, ACH DEBIT, or a similar shortening, followed by a company name. ACH is the network banks use to move money from one account to another. The CFPB lists payments you set up to be deducted automatically as electronic fund transfers, along with some online bill payments and debit card purchases. Payroll into your account is the same network in the other direction. A debit is money out. A credit is money in.

In Canada, the consumer name is a pre-authorized debit, often shortened to PAD. The Financial Consumer Agency of Canada says a pre-authorized debit lets the biller withdraw money when a payment is due. Examples it gives are a mortgage, a utility, an RRSP contribution, an insurance premium, and a credit card payment. The agreement should say the amount, which can be the same every time or different, and how often the money leaves.

The name to search is the company on the line, not the word ACH or PAD. Match it to an email, a lease, a gym, an insurer, or a lender. A short name can be a parent company. Unknown charge on a statement is the matching page. A card purchase labeled CHECKCARD or POS is a different rail. Do not use the PAD cancel steps on a card purchase.

The full list of these short names is on statement codes.

How to stop the next US debit

The CFPB's page on stopping automatic payments says you can take permission away even if you allowed the company before. Call the company and say you are taking away permission for automatic payments from your bank account. Follow up in writing or by email. Say whether you are canceling the contract or only changing how you pay. Then call the bank, say you revoked that permission, and follow up in writing. The CFPB says that after you have told both, any further payment the company starts is an error you can ask the bank to refund.

Some banks also want a stop payment order. The CFPB says banks and credit unions generally charge fees for stop payment orders. It does not print a dollar amount on that page. Your bank's fee schedule is the price. The CFPB's page about a payday lender's electronic debit says to give the bank the stop payment at least three business days before the next scheduled payment, in person, by phone, or in writing. Follow the form your own bank gives you. A stop payment fee is separate from the debit itself. Amounts banks print are on stop payment fees.

Stopping the debit does not erase the bill. The CFPB says canceling an automatic payment on a loan does not cancel what you owe. You still have to pay another way. The same is true for a gym or a utility: cancel the service with the company if you want the service to end.

How to stop a Canadian pre-authorized debit

FCAC says you cancel a pre-authorized debit agreement by notifying the biller in writing and keeping a copy. The agreement should say how. After that, check that the withdrawals stop. If they continue, contact the biller. If you are not satisfied, you have 90 days to seek reimbursement through your financial institution. Canceling the agreement does not cancel the contract or the amount you owe. You still need a way to pay.

For one payment, FCAC says you can ask the bank for a stop payment, including on recurring payments. The page says to check how much time your bank needs. It does not print a nationwide fee. Ask the bank, or read its fee schedule, before you assume the stop is free.

If the amount changes each time, FCAC says the biller must give written notice of the amount at least 10 days before the withdrawal, unless you agreed to waive or shorten that wait. If the agreement does not set a schedule, or the schedule is "whenever you are billed," the biller must get your approval for each debit. A confirmation of a phone or online signup must be sent at least 3 days before the first withdrawal.

If the debit was wrong or not allowed

In the US, the CFPB says to tell the bank about an unauthorized withdrawal. At the latest, tell them within 60 days after they send the statement that shows it. If you wait longer, you could have to pay for transfers that happened after that 60 day period and before you notified them, if the bank shows those later transfers would not have happened had you spoken up in time. Once you notify them, the bank generally has 10 business days to investigate, or 20 business days if the account has been open less than 30 days. It must correct an error within one business day after it decides one occurred, and it has three business days to report the result. If it cannot finish in 10 or 20 business days, it generally must issue a temporary credit for the disputed amount, minus a maximum of $50, unless it asked you to confirm the phone report in writing and you did not do that within 10 business days. It must resolve the issue in 45 days, or up to 90 days if the transfer was foreign, was in the first 30 days of a new account, or was a debit card point-of-sale purchase. Full steps are on dispute a charge in the US.

In Canada, FCAC says you usually have 90 calendar days from the day the funds left the account to report a pre-authorized debit you did not approve and to ask for the money back. The bank does not have to reimburse you after 90 days. You can get the money back if the debit was on the wrong date, for the wrong amount, or the contract was canceled. You sign a declaration. A transfer from your own account at one bank to your own account at another bank may not be reversible. Ask the bank. Extra fees caused by the bad debit, such as a non-sufficient funds fee, can be asked about at the same time. The Canada page is dispute a charge in Canada.

Upload the statement on Expenvo. The PDF stays on your device. Expenvo lists the lines so you can match a short name to a date and an amount. It does not call the bank, and it does not dispute a charge.

Questions

Is an ACH debit a card purchase?

No. It is a company pulling money from the bank account. A CHECKCARD or POS DEBIT line is the card. The company name on the ACH line is who to search.

Does canceling the debit cancel the bill?

No. The CFPB and FCAC both say stopping the automatic payment does not cancel what you owe. You still arrange another way to pay if the contract continues.

How long do I have in Canada?

FCAC says you usually have 90 calendar days from the withdrawal to report a pre-authorized debit you did not approve. The bank does not have to reimburse you after that.

Will the bank charge me to stop a payment?

The CFPB says banks generally charge fees for stop payment orders and does not print a dollar amount. FCAC tells you to ask your bank how much time a stop payment needs. Read your fee schedule.

Sources

• CFPB: stop automatic payments from your bank account
• CFPB: stop a payday lender's electronic debit
• CFPB: unauthorized transaction on a bank account
• FCAC: pre-authorized debits

Related guides

• Statement codes
• Dispute a charge in the US
• Dispute a charge in Canada