Did you check your bank account and notice that the auction had taken money out without your knowledge? Believe it or not, that happens more often than you think. Watch this video for an explanation and cautionary tale about auto drafts and bank authorizations.
Below is a transcript of the video:
Now we are going to revisit my story of the dealer that had the car repossessed a couple of sellers down the road because the dealer sold at auction a car that had been reported as stolen. You may have heard me say that the auction just pulled the money right out of the dealer’s account and said, “can they do that?” Short answer, yes. Most auctions, at least most that I’ve seen, require the dealer to provide bank information to the auction, authorizing the auction to make automatic debits and automatic contributions or credits or deposits to that dealer’s account deposits.
Obviously, in the event of a sale where the dealer is selling the car credits, debits in the event that a dealer is buying the car. That goes later down the road when there are arbitration issues and complaints. Sometimes the auction will simply just pull money right out of the account without the dealer even knowing it’s happening. Fortunately for that dealer, they had the money in the account when it was taken.
Some aren’t so fortunate. So it’s important to note what permissions the dealer is giving the auction when it comes to debiting the account and depositing into the account, as well as how much money is in the account at any one time, just in case something needs to be done through the auction. Certainly, if an auction tries to debit a dealer’s account and there are insufficient funds in that account, the dealer risks being put on probation or even on the blacklist and being banned from that auction.
For more videos on the Georgia Car Law Authority series, please visit www.georgiacarlaw.com.
For more information and to book a strategy session, click here!
P.S. Have you heard about The Driveway, our monthly legal membership program? Check it out here!
Debit and Deposit Authorization