Recurring Credit Card Charges Horror

An annoying part of life is the collection of recurring credit card charges over time. Things like gym memberships, or the kind of stuff companies like Intelius trick people into accidentally buying.

You can’t get these charges to stop. You talk to the companies. You threaten the companies. They drag their feet and never close the account.

But hey, there’s always the wipe out option. You call your credit card and ask for a new card. No one can make charges to the old number any more. I did this a couple of months ago to clear out about $400 per month in recurring charges that had accumulated over many years (this was my main TechCrunch credit card, so there was lots of random stuff).

That wipe out option was one of life’s small pleasures. A way to stick it to those companies that just won’t stop charging your credit card.

Apparently that’s all over now, and has been for some time due to changes in government regulations. Merchants can push charges through on the new card. There’s nothing you can do about it, and I have three merchants charging me a total of $113.95 that won’t go away.

Chase, the bank behind this credit card, says they have no choice but to keep charging me. I don’t know if that’s true or not. But it’s awful for the customer. And in this case it resulted in a lost customer.

Today I cancelled that credit card. My only other option was to go through the lengthy paperwork process of disputing all of these charges, and there’s no way I was going to do that.

31 thoughts on “Recurring Credit Card Charges Horror

  1. Scorched earth policy is effective, but are there potential repercussions to your credit rating? I’m assuming “no” since in the eyes of the bank you’ve paid up in full. But I also assumed that changing the credit card number would work and was surprised to read this post and find out that’s not the case! Scary the merchant can find you at the new account number; that’s lame that the bank isn’t protecting the cardholder customer.

    • Michael says:

      Probably no repercussions to MA’s credit since this was an old card (from MA’s TechCrunch days), and replacing it, or just paying it off and closing it won’t have impact on the factors that FICO uses.

    • Michael Arrington says:

      no idea, though I doubt it. As an aside, I already have a terrible credit rating and have trouble getting credit cards in general. http://techcrunch.com/2010/10/25/damnit-amex-give-me-a-credit-card/

    • There are some repercussions. A card with a nice long history is better for your credit score than one you just got. Applying for credit with the new company has an impact on your credit score.
      There’s also the possibility that the companies who are trying to bill the old card will let it accumulate for a year and then send it to a collections agency, which will have a very negative impact on your credit score.

      • Michael Arrington says:

        If that gym sends a collection agency after me I’ll buy the business just to fire everyone who works there, and then shut it down. :-)

        • That may work if it’s only the gym and you can afford it :), but Kevin is right – ust because the payment method stops working doesn’t mean the company can’t bill you. You’ll either end up getting mailed letters with bills and/or they will send you to collections. They won’t just write it off. I think you have to bite the bullet here and get on the phone, live tweeting your anger and ridicule while you do so…

  2. J Rapoport says:

    When a startup (that will not be named) refused to stop charging me for something I had clearly opted out of, I did manage to get Chase to reverse the charge without much more than a phone call.

  3. I had this happen recently with myfax, thought I had finally freed myself, with my old card expiring and then several months later I got a big charge on the new card. I was able to dispute it though and B of A took it off. I was wondering how that could happen, thanks for the background on the change and good luck with the new card.

  4. Jason Carr says:

    It doesn’t surprise me that a loophole exists like this one in some law somewhere but my guess is yet another new law will eventually be passed to prevent this from happening if enough people raise hell about it. It appears however that this is more of an effort by credit card companies to make this happen…naturally they want those fees so why wouldn’t they support this? Chase telling you they have no choice but to keep charging you is the same as a wolf telling a chicken it has no choice but to keep eating it. They kept charging you because it is in their best interest to do so whether it screws you or not. I guess if enough customers cancel as you have done, they’ll reconsider. Whether or not that will happen is another story.

  5. misterarcher says:

    From the other side of the table, some merchants receive more than their fair share of chargeback requests. Although customers might have to fill out some paperwork… after you file the chargeback request, the burden of proof is on the merchant. They are guilty till proven innocent.

    It’s an enormous undertaking for them to complete their paperwork to demonstrate it is a legit charge. If there are sketchy charges on your card, i highly recommend you filing a chargeback and chances are you will win. Of course, always a good first step is to dispute the charge directly with the company.

    Hopefully, they will be customer-friendly and avoid the time suck of the chargeback route… where the only people who win are the banks since this is turning into a revenue center for them ($20 – $40 in additional earnings for them)

  6. J. Peterson says:

    I’ve rarely had “lengthy paperwork” to dispute a charge, at least with B of A. Usually all it takes is a phone call.

  7. Michael says:

    I have to believe that this is an issue of your bank, not the credit card rules. If your bank thought of you as important enough to do a charge back, costs them about $10, then you would not have this problem.

    Obviously Chase did not think you were that important… So change banks.

    BTW in a former life I ran the credit card business division for a large financial institution

    • Michael Arrington says:

      did you see the link to the nasdaq site? Something in the regulations changed in the last 18 months or so, although I don’t know if it’s a choice for banks to comply or not.

  8. JP says:

    Chances are they might even find you if you go to another CC issuer. Fraud prevention is networked now, as I found out a few months ago, where rep of CC issuer B could see in my records at B that another CC issuer A had blocked my card there due to fraud prevention kicking in (false positive in Valentine’s Day, that *sucked*).
    So I’d be curious to hear back if the recurring charges were being punched through, even to another issuer.
    At any rate, the dispute process is the “clean” way, paperwork and all. I always keep the relevant correspondence handy, documenting my requests for service cancellation. Because, just cutting off payments as you try unfortunately is not the ethical or “right” way, truth be told.

  9. Eric says:

    Don’t assume you’re out of the woods yet.

    Back in 2005 I subscribed to VoIP service through Vonage for a few months. When I was done with the service, I called their customer service line to request that my account be canceled. The rep tried to strongly discourage me from canceling, but when he failed to change my mind he said their policy prevented him from canceling my account right away, but a different representative would call me back the next day to take care of it. Surprise, surprise, they never called back.

    I called them again, insisting that my account be canceled right away. This time the rep said he would transfer me to a supervisor. Strangely enough, my call got disconnected at that point.

    Sensing a pattern, I decided to make a paper trail. I looked in their terms of service, and they said requests for cancellation can be made in writing. I wrote such a request and sent it to the email address provided for that purpose and also mailed a copy to their physical address. Lo and behold, I still got billed for the service the next month.

    I then disputed the charge through my credit card company, providing the bank with a copy of the letter I sent Vonage as proof that the charge was fraudulent. This worked, but Vonage kept charging me. Obviously, disputing the charge every month would take forever, so I canceled the credit card.

    I was hoping (as you hope) that canceling the credit card would make them go away, but I was wrong. After a few months of failed charges to a closed credit card account, they referred my account to a collections agency. Now the collections agency was calling me a couple of times a week.

    I eventually had to write to the consumer affairs department of my state attorney general’s office, providing them with a copy of Vonage’s terms of service and the written cancellation request I sent to them in full compliance with the terms of service. The attorney general’s office convinced Vonage to call off the collections agency, but it took an amazing amount of trouble to get to that point.

    Here’s hoping none of the companies still billing you every month is as tenacious and dishonest as Vonage was, but there’s always a chance.

  10. Pete says:

    Citi offers virtual card numbers on their accounts. These numbers, which you can generate on the fly, can only be charged up to a cumulative dollar amount and/or date that you specify. (They also lock to the merchant of the first charge to that number, rejecting any charges from other merchants.) I always use virtual card numbers for merchants that insist on recurring credit card charges. See http://www.citicards.com.

    I’m not affiliated with Citi, other than as a customer.

    • spanky jones says:

      Citi’s virtual accounts are just a false sense of security. I signed up for a membership site using a virtual account. Even after cancelling the membership Citi allowed the company to continue to charge my card even though the expiration date and dollar limit were exceeded on my virtual card. I never got the money back. Prepaid credit cards are the only way to go with membership sites.

  11. Aryeh says:

    You should look into http://www.billguard.com – They have a killer product that help identify the problematic charges.

  12. g.... says:

    The Government is in bed with these douchebags – credit card companies and the recurringists. The consumer is sol as the laws are meant to enrichen the douchebags.

    Vote the bastards out and reclaim what is rightfully ours.

  13. Mark Jaquith says:

    Most banks allow you to spin up “virtual” credit cards. These virtual cards can be given an expiration date, or a spending limit (or both). Or, you can create high limits and then manually “destroy” these virtual cards as needed.

    If you gave a company your real credit card number, just spin up a virtual one, change your billing info to that new virtual card, and then once that is confirmed, destroy the virtual card. Most billing systems will not keep the old number in the system once you’ve verified a new valid number. Use that to your advantage.

  14. Disputes with AMEX are awesome – just a few clicks on their online service. They credit you instantly, and it’s the merchant duty to prove the purchase/order. I don’t know if other U.S. credit card companies have a similar feature.

  15. Yaron Samid says:

    Hi Mike,

    Not sure if you’re using BillGuard (www.billguard.com), but finding and canceling unwanted recurring charges on your credit card is our sweet spot. As a reminder, we crowdsource millions of billing complaints (from the web, banks, gov and our app) and alert you when your bills contain charges reported by others. Many of our users told us that, like you, they had a miserable time trying to remove the bad charges on their bills that BillGuard found for them. In response, we launched our new BillGuard Resolve service that contacts the merchant on your behalf to get your money back or cancel services/subscriptions like the ones that you had such a hard time canceling. With the power of the crowd and risk of getting hit with costly chargeback fees, believe me merchants respond to BillGuard. It’s not only in their financial interest to resolve your billing dispute directly with you, its in your bank’s financial interest that things work this way as well. Classic win-win-win.

    Using your example of Intelius, check out their BillGuard Resolve page:

    https://www.billguard.com/search/intelius-cm-85d2qtd/

    Click “Dispute with merchant button” to see how it works. Would love your feedback.

    Yaron
    CEO, BillGuard
    http://www.billguard.com

  16. Chan says:

    I was both crestfallen and heartbroken reading this. I am hopeful that Obamacare will rid the world of such scum.

    BTW, given your rotundness, did you get a gym membership put of weakness?

  17. Andy says:

    Any comments on facebook stock? i want to know whats your take on it.

  18. Anthony Krumeich says:

    Option #2 (let’s say I *accidentally* discovered this): max the credit card out. Once a company tries to charge your credit card 2+ times and fails, almost every one of them cancels your account. Do failed charges cost them anything in processing fees? If so, that might explain why they do this.

  19. Chase did the same thing to me.

  20. So the main culprits are web service providers? I am surprise on the necessity to keep a card alive to maintain a good credit history. I don’t live in the US.

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  22. Barbara Renick says:

    Keep calling and keep complaining. Senior citizens are targeted by unethical businesses, and we are not protected by our bank as we thought. Be vigilant, and watchful of glitzy ads. I got duped when such an ad used the word “trial” which I took to mean sample, so I was charged a large sum of money when I did not have the money. My bank put it through anyway and now my account is frozen, I am being sent a new debit card, and the policy of the merchant is no refunds. In the meantime I cannot use my account, pay my bills, or use my monthly benefit check. Recurring debit card purchase policies allows for theft of unsuspecting Americans, and gouging by banks and merchants.

  23. fbn says:

    Hi

    been there especially porn sites wont let you cancel just like that. They will through an annoying outter site that suddenly doesnt find your ( just for that! ) kept infos because you were sure you canceled but magically it hase been reactivated and somehow there are cc bills that just doesnt seem right since u canceled this very one porn site 3 times now but u are SURE 1 million % u have not been on this porn site so it can 1 billion % not bee that u have an active subscription there but hey im 1 trillion % sure they still have my cc infos…

    I swear i experienced that a couple of times and i hope these stupid a-holes get what they deserve one day

  24. Bob Justbob says:

    This entire discussion points out that credit cards are not created for the user’s benefit but for the merchants. If it were created for the user’s benefit, the user would have real control, the user would be able to issue a one-time payment that the merchant could not repeat. A continuing series of payments could be ended at any time without having to plead with the merchant or the bank.It should be a simple matter of informing the bank that repeating charges from this merchant are no longer to be honored. It certainly is not that way.

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