DMV slams drivers with late fees after registering their cars with eChecks

SAN JOSE, Calif. (KGO) — It happened to several 7 On Your Side viewers. They renew their registration on the DMV website, receive confirmation of payment, and even receive their new registration card and sticker in the mail. But then, a month later, they’re hit with a demand for payment plus late fees and penalties – and no idea why.

“To be completely honest, I didn’t believe it. I thought it was a scam,” said Terri Brown of San Jose.

Brown’s ordeal began two years ago when she paid for her car registration online.

She received a receipt, the DMV sent her registration stickers and all seemed well – but weeks later she received a letter from the DMV, demanding payment plus late fees and penalties.

Brown thought it was a fake.

“I even took it to my mom. I was like, ‘Mom, look how these guys can rip it off,'” Brown said.

But it was real. The DMV notice stated that the electronic check she submitted was not good, even though the DMV receipt stated “payment successful”. Now she had to pay $148 in late fees and penalties.

“I had to go get a cashier’s check and go in person to the DMV. And I thought the problem was solved,” Brown said.

But that was not the case. The same thing happened when Brown renewed online again. She paid by e-check, got her registration and stickers — but weeks later, the DMV sent that demand for payment plus penalties, saying her e-check had bounced.

“I just couldn’t believe it was the same – I received successful payment, my registration stickers. And now I’m being charged this astronomical late fee, you know, which, as I l I said, the system is broken,” Brown said.

Brown says the DMV should have informed her immediately if the check didn’t clear, instead of waiting for her to be hit with late fees.

“I can’t imagine how much money they’re getting out with those 60% penalties,” Brown said.

“I felt it was very, very strange and misleading, even fraudulent,” said Saratoga’s Alex Lee.

The same thing happened to Lee. He paid with an e-check, got a payment receipt – and the DMV sent his registration, then – shock.

“I’m sorry, your, your payment didn’t go through and now you owe us a late fee,” Lee said.

The DMV said he now owed $457 and could only pay by cashier’s check or money order.

So Alex mailed the payment — but instead of a renewal, he received one last payment request, threatening to seize his car!

“Double the amount, and your registration could be locked and lost. And I, and I was scratching my head, like, this is ridiculous,” Lee said.

It turns out that Lee and Brown had mistakenly entered their savings account numbers, which won’t generate an electronic check. The DMV acknowledged that its online payment system accepted payments even if an account number was invalid – and it sent the registration cards anyway, quote, “as a courtesy to the customer.” But customers said the late fee was anything but a courtesy.

“If it was a private company, I would think it was helpful,” Lee said. “It’s a bit of a stretch to just threaten to take my car away from me. And the system is very outdated.”

However, after inquiries from 7 On Your Side, the DMV modified the electronic verification system to flag incorrect account numbers.

He also reimbursed late fees for Brown and Lee, and several others who came to 7 On Your Side for help, saying, “As soon as the DMV became aware of the increased number of customers inconvenienced by this issue, the department has taken steps to further improve the electronic check payment process and address customer complaints.”

The DMV did not specify the number of customers affected by unjustified late fees, but promised refunds to those who believed their payment had been made. If this has happened to you, contact 7 On Your Side.

Check out more stories and videos from Michael Finney and 7 On Your Side.

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