It’s pretty easy to hoax people. We all want to be deceived, but only up to a point. Some hoaxes are fun and pleasant, others malicious and unpleasant. We’d like a way to tell the difference (Robert Carroll).

Oct 25, 2013

Big Story of the Zero-Dollar Bill

There are multiple variations of the story, appearing on message boards, blogs, and distributed through email. The most popular text of the story is as following:

A man living in Newton, Massachusetts received a bill on his as yet unused credit card stating that he owed $0.00. He threw it away. In April he received another and tossed that one, too. The following month the credit card company sent him a nasty note stating they were going to cancel his card if he didn't send them $0.00.

In retrospect, he probably should have let them do that. Instead he called the company and was informed that the problem was the result of a computer error. They told him they'd take care of it.

The following month he reasoned that, if other charges appeared on the card, then it would put an end to his ridiculous predicament. Besides, they assured him the problem would be resolved. So he presented his card for a purchase. It was declined.

Once again he called. He learned that the credit card had been cancelled for lack of payment. They apologized for (here it is again) another computer error and promised they would rectify the situation.

The next day he got a bill for $0.00 stating that payment was now overdue. Assuming that this bill was yet another mistake, he ignored it. But the following month he received yet another bill for $0.00 stating that he had ten days to pay his account in full or the company would take necessary steps to recover the debt.

He gave in. He mailed in a check for $0.00. The computer duly processed it and returned a statement to the effect that his account was paid in full.

A week later, the man's bank called him asking him why he wrote a check for $0.00. He explained the problem at length. The bank replied that the $0.00 check had caused their check processing software to fail. The bank could not now process ANY checks from ANY of their customers that day because the check for $0.00 caused a computer crash.

The following month the man received a letter from the credit card company claiming that his check had bounced, that he still owed $0.00 and, unless payment was sent immediately, they would institute procedures to collect his debt.

This is a funny story, but still a fiction. Financial experts claim that a zero-dollar check isn't going to cause any financial institution's computers to crash.

Can $0.00 billings occur? Ask a bookkeeper who has dealt with a computerized receivables system that generates finance charges but does not round off the amounts. In a situation where an overdue account has attracted a finance charge, such bills can occur when the customer pays his bill. As far as the computer is concerned, a debt of < 1¢ still exists, so the program sends this information to the printer at statement printing time. However, because the program has also been coded not to print fractional cent amounts, it spits out a $0.00 statement.

In the now-vanished world where competent bookkeepers oversaw the receivables process, such oddities were caught before they were mailed out, and a reversing entry to cancel the fractional finance charge was entered to soothe the electronic beast. In the modern world, statements are all too often automatically stuffed into window envelopes, franked, and mailed, and accounting personnel think a reversing entry is something one performs to back into a parking space

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