Cancellation means cancellation right?

Henry’s credit card company contacted him with concerns because of some suspicious charges on his account. Henry confirmed the charges were not his, and cancelled his card. Henry said that the company assured him the suspicious charges would not be charged to his account.

Henry then discovered that the suspicious charges had been charged to his account (although, after some time, they were credited back), and that there were further post-cancellation charges totalling $8,800. When Henry did not pay, the company passed the debt onto a debt collection agency. Henry paid $8,800 to avoid being further pursued by the agency. Henry then asked the company to reimburse him the $8,800.

The company said that if Henry had transacted with a merchant using his credit card in the past, any further charges from that merchant could be charged against Henry’s account in the future. This was even if Henry had cancelled his card. In those circumstances, the company considered the charges to be ‘recurring’, and would honour them. To avoid further charges, Henry had to contact merchants and cancel any recurring charge authorisations in place.

Henry was dissatisfied with the company’s service and wanted to be reimbursed $8,800. Henry brought his complaint to FSCL.

 

Dispute

Henry said no further charges should have been made to his account after his card was cancelled. Moreover, Henry said there were no recurring charges on his account, and there was no basis for the company to charge the $8,800 following cancellation.

Further, Henry said the company’s service was poor and caused him inconvenience because:

  • It charged the suspicious charges to Henry’s account, despite saying it would not.
  • It referred the debt to a debt collection agency.
  • Henry was without the $8,800 for some time.
  • Henry had spent a lot of time trying to resolve the issue with the company.

 

The company said the $8,800 charges had been correctly charged to Henry’s account, based on its ‘recurring charges’ policy.

 

Review

The company had no record of the call where Henry said he was told the suspicious charges would not be charged to his account. We therefore preferred Henry’s recollection of the conversation: the company said one thing and then did another, by still charging the suspicious charges to Henry’s account.

We also said that the company did not correctly follow its own process for ‘recurring charges’. The company’s internal documents said that it bases its ‘recurring charges’ procedure on written recurring charge authorisations between its customers and merchants. However, the company could provide no evidence of any authorisations between Henry and the relevant merchants.

Often consumers will have recurring charge authorisations in place for regular payments from their credit card, for example insurance premiums or utility payments where regular payments are made for a consistent amount. However, the charges on Henry’s account were not of a recurring nature. Further, we said it was overly burdensome on customers to have to contact every previous merchant to check whether any ‘recurrent charge’ authorisations were in place, and to cancel them.

We also said the company caused Henry inconvenience by:

  • Charging the suspicious charges to Henry’s account, despite saying it would not.
  • Failing to cancel Henry’s card when asked.
  • Passing the debt onto a debt collection agency, with Henry being without $8,800 for some time.
  • Henry having to contact the company several times about the issue.

 

Resolution

We decided that the company had to reimburse the $8,800, and pay Henry $500 for the inconvenience it caused him. Henry accepted $9,300 from the company in full and final settlement of the complaint.

 

Insights for consumers

After cancelling a credit card, some charges could still be honoured if they are ‘recurring’. If you are unsure, it would pay to double check with merchants after you cancel your card whether there are any authorisations in place.

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