The first indication that something was wrong came when two staff members, one of them a pastor, at First Baptist Church of Frederick noticed that their checks, which were deposited on Aug. 30, were reversed last week.
Janna Cansler, the office manager at the church, quickly contacted all 12 employees to find out if the same thing happened to them, and it did.
The employees at the church had fallen victim to a payroll company shutting down that has affected companies nationwide.
MyPayrollHR is a New York-based payroll company that closed its doors without notice last week, leaving thousands of employees across the country without their paychecks. Employees either did not receive their payment or received it but then saw it get reversed.
The alleged fraud has been reported by local news outlets in New York City, Pittsburgh, Albany and San Diego.
For the Frederick church, initial reversals happened to every staff member except Richard Krauss, the church’s associate pastor, and one other employee. Krauss’ payment was reversed on Friday and then again on Saturday.
Some employees, like Krauss, had a second withdrawal from a third company, Cachet Financial Services, that handles the distribution of payments.
The church’s day care and preschool — Little Lights Child Development Center — has 18 employees, which were not affected by the payroll reversal due to the children’s ministries director, Rachel Pyles, submitting the payroll on a Monday. Cansler submitted payroll for 12 church employees on a Tuesday. She thinks that because Pyles submitted payroll on a Monday, the funds had cleared before they could be reversed.
“I called MyPayroll, and what they told us was they were having an issue with their parent company,” Cansler said. “They were very embarrassed. Their words that they used, they were working on it and they hoped to have some sort of resolution by 2 p.m.”
When she called again at 2 p.m., there was a cryptic automated message stating that no one was available, she said. A message also came through its website portal that said clients should find an alternate payroll company and that if anyone has payment reversals or deposits that weren’t made, they should find other payroll solutions.
When calling the support number, a message comes through with a menu of options. When directed to the sales department, a message says that all sales team members are unavailable.
The website has not been taken down.
After the shutdown, New York Gov. Andrew Cuomo issued a statement on Sept. 6 calling for the state’s Department of Financial Services to investigate the company’s actions.
“The sudden and unexplained shutdown of MyPayrollHR in Clifton Park is disturbing and completely unacceptable,” he said in a statement on the DFS’ website. “Its reckless actions have left employees across the state and the nation with negative bank accounts and forced businesses who depend on its payroll services to scramble to find ways to compensate their employees.”
No complaints have been filed with the Maryland Office of Attorney General’s Consumer Protection Division as of Wednesday, according to Raquel Coombs, director of communications with the attorney general’s office.
“At this point in time I think our paychecks are still in limbo for the most part,” Krauss said. “Some of us have gotten our personal banks to reverse the [withdrawal].”
But it all depends on the bank, he added.
“Some people’s banks are not being as helpful,” Cansler said.
As of Wednesday, about eight of the 12 employees had their payments put back into their accounts with the help of their banks.
Krauss, one of four employees still waiting for their payments, was taken aback when he saw a second withdrawal from his account.
“I had to gather myself,” he said. “It affected me as I spent my entire weekend dealing with my bank, calling Cachet bank and trying to contact the bank up in New York.”
He reached Cachet where he spoke with a “very tired, frustrated, overwhelmed” woman who advised him to file an automated clearing house, or ACH, transaction with his bank. Since then, he’s been in touch with his bank multiple times and said it is also doing an authorized ACH transaction investigation.
He was told the investigation will take 10 days, and then the bank will issue its findings and determine if it can reimburse him.
Cachet did not respond for a request for comment Wednesday afternoon.
Cansler said the church is working with a new payroll company, but for this week — a payroll week — the church will disperse paper checks. If employees’ original payments are not returned, the church will work with them to replace those funds, Krauss said.
The employees were also advised to close their current bank accounts and open a new one in case another reversal happened. Krauss opened a new account but is keeping his old account open with hopes that the withdrawals will be reversed.
Because people are being affected by this nationwide, a Facebook group — Victims of MyPayrollHR and CachetFS — was created to help those affected. The page, which had more than 1,900 members on Wednesday, provides information on how employees can get their payments back.
As for end-of-the-year tax forms, Cansler said their new payroll company can look into tax reports that were already filed for 2019, but nothing has been confirmed.
To avoid falling victim to a fraud case similar to what they’re experiencing, Krauss urged businesses to look closely at their contracts with their payroll companies.
“There are clauses there that I don’t think we were aware of,” he said. “One of the things that was thrown back in my face, repeatedly, was within the space of five business days your payroll company has every right to withdraw your check as well as deposit it. The door turns both ways, and they have your routing number, your account number and all of your information.
“I think the only thing we can do is learn to protect ourselves going forward,” he added. “We’re a lot more vulnerable than we think we are.”