Technical Glitch Impacts Thousands

July 9, 2007
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GRAND RAPIDS — Thirty-six of Gemini Publications' 47 employees were among tens of thousands who bore the brunt of a glitch in the direct deposit transmittal process of one of the largest Automated Clearing House processors in the country: California-based Alliance Payment Technologies Inc.

The fiasco involved millions of dollars in direct deposits and left many employees empty-handed just days before the Fourth of July.

Gemini's payroll processor, FlexChecks, informed the company's accounting and payroll department just after on Friday, June 29, that direct deposits had not been completed. Paul Hook, CEO of Alliance Payment, the transmitting company for Flex Checks, said his company's processing bank, Bay Cities Bank, hit a snag when it tried to send the transmitted files to the Federal Reserve.

Due to "several technical issues," Bay Cities Bank said it was unable to send files until 9:30 a.m. Eastern Standard Time, which was past the Federal Reserve cutoff for the day, so the money was not distributed to banks on Friday as expected.

Hook said by the time Alliance Payment was notified, it was too late to send the files to an alternate bank for distribution. Hook had indicated that most receiving banks would likely have direct deposits filed by Friday. However, none of the receiving banks were obligated to post the files until Monday.

FlexChecks wasn't the only system impacted by the problem. Hook said APT services more than 300 payroll processors nationwide, and all were affected by the situation. All Bay Cities Bank customers were impacted, as well.

Hook said Bay Cities Bank, of Tampa, Fla., experienced a combination of technical difficulties that day, the first being the registry of Internet Protocol addresses, which is required by the Fed.

"The day before this happened, the bank changed its forward-facing IP addresses, so the Fed wouldn't let them connect from there. The bank's operations people in the ACH department had to literally go home and literally work off of their bank-issued laptops through their back-up center using those IP addresses," Hook explained.

Working at home was a slower, more cumbersome process, he said. Then the bank ran into technology problems with its own ACH software and had to contact its vendor.

"By the time they got done and created a file to send to the Fed, it was 10 minutes after that night's cut off for a Friday posting date," Hook said. "The deadline was , and we sent out the confirmation that the file was actually posted at

"It was just a really unfortunate series of events."

Gemini Accounting Assistant and Credit Manager Bev Horinga said some Gemini employee direct payroll deposits were completed over the weekend and the last of them were completed by Monday.

Horinga said that to her knowledge no employee incurred late fees as a result of the delay in direct deposits. She said many Gemini employees make regularly scheduled online payments to creditors, and they rely on their direct payroll deposit to cover those payments. A few employees overdrafted on their accounts as a result, and a couple of others would have had they not had overdraft protection, Horinga said.    

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