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Revoking a Payday Lender’s Electronic Access to Your Bank Account

This guide presents selected U.S. government consumer education from CFPB. References to “we” or “us” in the source material refer to the issuing agency. Source dates and links appear below.

I was asked to sign an "ACH authorization" to allow electronic access to my account to repay a payday loan. What is that?

An Automated Clearing House (ACH) authorization is a payment authorization that gives the lender permission to electronically take money from your bank, credit union, or prepaid card account when your payment is due. You can revoke this authorization.

What you should know

  • Consumers usually are asked to provide the payment authorization as part of the process of getting the loan. The authorization will be in your loan documents, and it may have a place for you to initial as approved. If you approve, the lender will take your payments directly from your account without any further action by you. You may choose to refuse to sign the authorization.
  • There are a variety of payment options for payday lenders to obtain repayment. Some lenders frequently obtain multiple types of authorizations, such as taking a post-dated check along with the consumer’s debit card information.
  • Under federal law lenders cannot condition a payday loan on obtaining an authorization from the consumer for ‘‘preauthorized’’ (recurring) electronic fund transfers.

Tip

Be sure that you can afford to repay the loan. If you don't have enough money in your account when the lender attempts a withdrawal, your loan will be delinquent. This might result in the lender charging you a late fee, and your bank or credit union charging you a “bounced check” or non-sufficient funds (NSF) fee.

Before you agree or sign

  • Read your loan documents carefully before signing them.
  • Make sure that the “ACH authorization” states clearly how it can be stopped or revoked. Don’t sign an ACH authorization that doesn’t clearly provide this information. If you have signed an authorization that does not contain instructions on how to revoke it, you could still revoke the authorization by contacting the lender, bank or credit union, or both.
  • Know exactly how much will be deducted from your account and when. Make sure you understand:
    • How much would be withdrawn from your account
    • Whether it's the full amount you borrowed, or a renewal or rollover fee that does not pay off the full amount borrowed and your loan is renewed automatically
    • When the withdrawal would occur

If you have problems with a payment authorization, such as the ACH was unauthorized or revoked, you may want to contact your state regulator or state attorney general . You can also submit a complaint to the CFPB online or by calling (855) 411-2372.

How can I stop a payday lender from electronically taking money out of my bank or credit union account?

You can stop electronic debits to your account by revoking the payment authorization, sometimes called an “ACH authorization."

You have the right to stop a payday lender from taking automatic electronic payments from your account, even if you previously allowed them. You may have signed a payment authorization, which is sometimes called an “ACH Authorization.” This gives the payday lender the ability to debit your account when your payment is due. If you decide you want to stop automatic debit payments from your account, here is what you can do.

How to stop automatic electronic debits

Call and write the company

Tell the company that you are taking away your permission for the company to take automatic payments out of your bank or credit union account. This is called “revoking authorization.” You can use this sample letter.

Call and write your bank or credit union

Tell your bank that you have “revoked authorization” for the company to take automatic payments from your account. You can use this sample letter. Some banks and credit unions may offer you an online form.

Stop payment

Even if you have not revoked your authorization with the company, you can stop an automatic payment from being charged to your account by giving your bank a “stop payment order.” This instructs your bank to stop the company from taking payments from your account. You can use this sample letter to submit a “stop payment order.” Here are the steps:

  1. To stop the next scheduled payment, give your bank the stop payment order at least three business days before the payment is scheduled. You can give the order in person, over the phone or in writing.
  2. To stop future payments, you might have to send your bank the stop payment order in writing. If your bank asks for a written order, make sure to provide it within 14 days of your oral notification.
  3. Be aware that banks commonly charge a fee for stop payment orders.

Monitor your accounts

Tell your bank or credit union right away if you see a payment that you did not allow (authorize) or a payment that was made after you revoked authorization. Federal law gives you the right to dispute and get your money back for any unauthorized transfers from your account, as long as you tell your bank in time. You can use our sample letter.

Revoking or cancelling your automatic payment does not cancel your contract with the payday lender. If you revoke or cancel an automatic payment on a loan, you still owe the balance on that loan.

If you’re having a problem stopping a lender from taking money out of your account, you may want to contact your state regulator or state attorney general. You can also submit a complaint to the CFPB online or by calling (855) 411-2372.

Could I be arrested if I don't pay back my payday loan?

No, you cannot be arrested for defaulting on a payday loan. However, if you are sued or a court judgment has been entered against you and you ignore a court order to appear, a judge may issue a warrant for your arrest.

You should never ignore a court order. If you get a court order to appear, you should go to court and provide any required information. You may want to consult with an attorney to help you with your court appearance. If a lender threatens to have you arrested, you should report the lender’s threat to your state attorney general and to your state regulator. You can also submit a complaint with the CFPB online or by calling 1-855-411-CFPB (2372).

Sources and publication details

The federal agency source text is U.S. government work in the public domain. Fynoptic selected, adapted, and formatted it for this guide. No agency endorsement is implied. Follow the linked sources for current program details and the rules applicable to your circumstances.

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