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Amazon.com Offers Payment Via Bank Account

As I went to pay for a recent Amazon.com [3] purchase, I saw that they now accept payment via a bank account (ACH). All you need to do is provide the typical bank account information (Bank Routing Number, Account Number, Your Name) and some atypical information (your driver’s license number and state). Is this a good way to be paying for your purchase? No because if you make a mistake you could be dinged with fees.

I poked around the Terms and Conditions and here are four points of note:
1. If you make a purchase and your account has insufficient funds, you’ll be dinged for $25 (3). This isn’t all that surprising though and it’s less than some bounced check fees.
2. You give Amazon authorization to request “a credit report and performing other credit checks or verifying the information you provide against third party databases” (2c) in the event of a dispute.
3. You’re forced to use their Error Resolution Policy (6) which means you have to provide them with all sorts of information regarding the transaction.
4. Fraud protection (such as unauthorized transfers) is provided by Amazon and only for 90 days.

It’s a viable option only if you do not have any credit cards. By paying via bank, you are assuming all the risk that your credit card company faces without the benefit of earning ungodly interest rates from high balance customers.

Use a credit card instead of your bank account (if you can) because (and these directly refute the points above):
1. Maybe your credit card dings you more if you go over your credit limit, but the chances of that happening are probably smaller than you overdrawing your account. You’re probably used to swiping the plastic for purchases but I bet you’re not used to e-swiping your bank account.
2. With a credit card, Amazon can’t do any of this. They can’t collect more information about you to save in a database some pimply computer thief can get into.
3. If there is a problem, call your credit card company and they’ll handle it. They’re being paid for it; Your time is infinitely more valuable.
4. Your credit card provides fraud protection and your liability is limited to $50, sometimes you have zero liability. There are no similar protections.

Finally, why would you save your critical bank account information on a website when you don’t have to? You shouldn’t.

I hope that this payment method doesn’t get traction or we might see a newspaper headline of: “Amazon Leaks Bank and Driver Data of 6M Customers” one day. (I’m not saying Amazon in particular has shoddy IT, but tapes fall off the back of trucks and mistakes do happen [4])