Bank of America Informative - BillPay - Outsourced to JPMorgan
In May 2008, Bank of America decided to outsource its BillPay check writing to JPMorgan. Under the new system, JPMorgan cashes the checks on the "Deliver By" date and holds the money until the creditor cashes the check, which now takes 5 days to clear. If the check is lost or the creditor doesn't cash the check, JPMorgan holds the money until the BofA client complains and cancels the check. BofA BillPay executives now expect clients to reconcile their bank accounts by calling creditors individually to ask if they have cashed their checks and credited their accounts. Using the BillPay system, there is now no way to verify that the creditor has cashed the check, because JPMorgan, a third party, cashes the check on the delivery day and subsequently sends its own check to the creditor.
Under this policy shift, JPMorgan in essence creates a buffer fund of cash it can use to earn interest. It holds BofA client money from the "Deliver by" date to the date the check clears, five days after the creditor deposits it.
There are a number of issues that come up with a policy like this. One, bank reconciliation is now virtually impossible. Two, lost or uncashed checks are unknown and can not be easily tracked. Three, in the event of a lost check, the BofA client is still liable to the creditor, even though on a bank statement, it will say that the BillPay creditor check has been cashed. In any other system, if the bank statement says the check has been cashed and the creditor did not cash the check, then one immediately takes action to investigate fraud. In this case, one has to contact BofA to get their money back from JPMorgan, and then investigate if JPMorgan says their check was cashed too.
Everyone should be aware of this policy shift if they are going to continue to use Bank of America Online Bill Pay.
More Reviews on Bank of America: