Can a tenant reverse a payment with COZY?

Question

Hey Guys,

I am in the process of picking up my second rental property and am looking to streamline the rent collection process. Currently I collect a check from my sole rental but would like to offer electronic payments as well.

The main issue I have is trying to find a system or practice that does not allow a customer (tenant) to reverse a fund after payment is made. I have had personal experiences with paypal where they took the buyers word without any evidence and screwed me out of a nice chunk of change.

I lie the idea of cashing a check because once its cashed, it's done. Do ACH or credit card payments offer this type of security? Whats to stop a tenant from paying the last month's rent on a lease, move out then put a claim in when they get their statement?

I am a Chase customer and have looked into quickpay but heard rumors it's just like paypal as in its reversible.

Thanks for the help

Steve

Joe Splitrock · Answer

You can reverse a check just as easy as you can reverse an ACH deposit, maybe easier. The problem is to reverse either of these, the tenant needs to declare the charges as not authorized. They would be lying, so there is risk for them that they are committing fraud.

If you want to hear something scary, checks can be reversed months after they were written. There was a case I heard of where a tenant was paying rent using a check book from a charity they worked at. It took the charity more than a year to catch the fraud and when they reported it to the bank, all the payments from the last year were reversed out of the landlords account.

Cashiers checks are more secure, but I think even they can be cancelled under certain circumstances.

Cash is king if you are concerned about someone trying to cancel the payment. If I have a tenant that bounces a check, I only take cash to replace it.

I have used Cozy for well over a year and find it to be secure and reliable. The tenant ACH authorization process is pretty good. If someone is reversing payment, they better have pretty good proof as to why they are doing it.

Sam Shueh · Answer

Ck with your bank if you do not trust your tenant you do not need to engage in a business relationship. That works both ways.

Gary Abner · Answer

I just had a tenant just reverse her rent payment today from Jan 1st.

She had to claim fraud in order to do this?

Assuming this is her plan and not the accident she claims, advice?

Shadonna N. · Answer

I was using Cozy and I had a tenant claim their bank account had charges they did not know about and had their account "frozen".  Cozy quickly took the money out of my account.  I had a very difficult time contacting Cozy and never really did get in touch with them.  Since I had used the money this caused my account to bounce.  This was her racket she did not again with my property manager.  I will never use Cozy again.  I know a lot of property managers that will draft/pull the money from the tenants' account.  I don't think that can be reversed.  In the event there is no money in the account, the tenant has to pay with money order.  You also have to be careful with cash.  A tenant can claim the envelope contained an amount and someone stole the missing funds once it left their hands.

Joe Splitrock · Answer

Right if your tenant claims fraud. That means you have a bad tenant. Cozy uses the same ACH system as every utility provider and mortgage provider. Whether it be bounced checks or reversed payments, it is only happens with trouble tenants. The key is always good screening. If you run C or D properties with poor screening, then cash is your best bet.

Michael Mueller · Answer

Not that difficult to reverse: https://www.biggerpockets.com/forums/52-rental-property-questions-landlording-issues/topics/538298-cozyco-problem-potential-major-flaw-in-their-system

Matt K. · Answer

Can't you put a stop payment on it? Even though the bank will credit you the amount, there's typically a hold on checks. Stand corrected you cant... "start" a stop payment once a check is cashed.

Steve G. · Answer

I will stick to paper checks then. There is no way in my knowledge to reverse a check payment after it has cleared. Allowing a tenant to reverse a credit card transaction a month after they leave is just asking for trouble.

Can a tenant reverse a payment with COZY?

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