Citibank Bill-Pay App Bug Charges Twice -- and Many Customers Never Knew

On Feb. 9 Citibank acknowledged that a popular iPad app designed for online bill paying has been erroneously double charging for months due to a software bug. Alert customers noticed that when they paid, say their cable bill, they found the money withdrawn twice. Many notified the bank as early as last July but was not detected by the bank itself till December.

But many more bank customers did not notice the error until either Citibank notified them this week or, as reported by The New York Times, when unsuspecting customers overdrew their accounts.

Although Citibank acknowledged the error and promptly restored the funds, the fact that so many bank customers were caught unaware for so many months highlights a common trend: that many Americans don't monitor their spending habits.

"People are not looking close enough at their [bank] statements," said Belinda Rosenblum, a Boston based wealth expert and president of OwnYourMoney.com, a financial coaching company. She said that many people look at some transactions, especially small ones, with apathy. Rosenblum said that when an unfamiliar transaction shows up they often dismiss it as 'It's only $20,' and not worth the effort to correct. But she said that recurring transactions like unwanted subscriptions can add up to hundreds of dollars. "It's no wonder that so many Americans live paycheck to paycheck."

Yaron Samid, co-founder and CEO of Billguard, a credit card transaction monitoring service, is also familiar with consumer behavior. Every month, he said, scores of credit card owners are unknowingly paying for twice billed transactions, hidden merchant fees, and "free subscriptions". He started his company to help consumers find charges that "fly below the radar" via e-mail alerts when double transactions occur. Samid said that card holders lack of attention to their bank and credit card statements is an exploited source of revenue to some online merchants.

"It's not not only hackers, but legitimate merchants that take advantage of the American consumer," he said.

Aside from developing the habit of studying one's statements, Samid offers advice for online consumers to avoid potential fraud, billing errors, and unwanted recurring charges:

1. Avoid shopping online with a debit card. This is a hard rule to obey if you hate running up a credit card balance. But if a hacker gets your debit card number he could wipe out your checking account balance in minutes and if a legitimate merchant mistakenly charges twice for the same transaction it immediately comes out of your checking account. Unlike a credit card, it might take days to recover the money from your bank. If you still decide to use a debit card be prepared to tap your savings account to cover any short term loss.

2. Research smaller merchants before your first purchase. If you aren't familiar with the company check out their Yelp reviews and feedback from the Better Business Bureau. If you see complaints of bad consumer practices, stay away.

3. Look at the fine print of the online billing plan. Most people don't do this but if you are enticed by the "try it for free" offers on the Internet then search out the section that might say you will be charged monthly on your credit card when the free trial period expires. Find out how easy it is to opt out before you commit.

4. Don't do business with an online merchant that doesn't have a phone number. This is a red flag. If the merchant doesn't post their customer service phone number then they don't deserve your business. Don't take a chance with a potential fly by night operation.

For some online consumers monitoring is vigilant daily habit. Despite Citibank's acknowledgement of their error a reader posted on The New York Times website that the double charging continues. "It just happened to me yesterday and I don't have an iPad. I did have enough to cover what would have been a very large overdraft."