Company continues to charge fees after account is closed. What are my options?
Recently on our legal forum a user asked, “I had agreed to purchase a monthly service but later cancelled it. The company had my credit card number and continued to charge me for the service each month. Without cancelling my credit card and having the bank issue me a new one, is there any other actions I can take to stop the automatic monthly charges?”
Unfortunately, whether it’s intentional or unintentional, if you have given your credit card information to a merchant or any type of seller they have information that they can use to make unauthorized charges. Many buyers have purchased services but later have decided to cancel the service, only to find the seller continues to charge them.
Stopping unauthorized charges from a company
The good news is there are some steps you can take immediately to protect yourself from unauthorized charges.
- Notify the bank immediately.
The first step is to contact the bank or credit card company who issued the debit or credit card and tell them that the seller is making unauthorized withdrawals or charging your credit card account without your permission.
Keep in mind, for maximum protection you need to notify your bank immediately. This is especially true if the unauthorized withdrawal was made with a debit card or electronic funds transfer, such as a payment through online bill pay or an ATM transaction. Failure to do so could limit your ability to recover funds under federal protection laws.
For example, if you lose your debit card and you notify the bank within 2 business days, the charges you owe could be limited to no more than $50 or the transaction amount, whichever is less. Waiting longer than 2 days to notify the bank, however, could increase the amount you have to pay to as much as $500. Additionally, you wait too long and you may completely lose your right to recover the loss.
What if someone stole my credit card or account number?
This is a bit different than the issue you raised, but in some cases there are fraudulent charges from someone that never had the right to deduct funds for services. For instance, the merchant or a rogue employee may get your number and fraudulently make charges against your account.
Even in this case, the steps are the same. You will need to notify your bank, but you may have up to 60 days from the date of the statement to contest the charges to avoid paying for the fraudulent transactions.
What if the bank determines the charges were legitimate?
In some cases, after the bank completes their investigation into the fraudulent charges complaint, they may decide that the charges were valid. For instance, you may have purchased a service and signed a contract that you would use the service for 12 months. In this case, per your contractual agreement, the withdrawals may be valid, even if you decided to cancel the service after 2 months.
So what does the credit union or bank do if they decide the seller has the legitimate right to deduct the money or charge your credit card? They will send you written notice about their findings, and if they credited your account during the investigation they may have the right to deduct the money again or charge you for the transactions (if they were made with your credit card).
Should I change my account number or cancel my credit cards?
It’s not unusual for different companies to have your credit card or account information stored in their computer systems, even if you no longer have an account with them. Unfortunately, allowing companies to keep your account information increases the risk of theft of your account details.
You mentioned wanting to avoid having to close your accounts, but sometimes the only way to ensure your accounts will not be compromised again is to change your account numbers.
Your bank or credit card company should be willing to help you do this, especially if there has been an unauthorized access of your account. There are downsides, however, to this strategy. For instance, you may have your credit card set up to do several authorized, monthly withdrawals. In this case you would have to contact those companies and make sure they have your updated account information.
In some cases, closing your accounts may be the only sure way to stop unauthorized transactions. If you decide not to take this actions, however, do not be surprised when those who are determined to steal your money do it again.
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