Am I liable for this debt?

wuno

Not sure if this is the best place to put this query in, but here goes:

Had an MBNA credit card. Paid off the balance in 2003. Moved house and instead of sending them a change of address notification, sent them a letter asking for the card to be cancelled.

Cut up my card, haven't used the account since. Forgot all about it.

Fast forward to 2006. Receive a letter from a debt collection agency telling me I owe them £230 for a debt run up on my MBNA credit card that was defaulted and bought by them.

I ask them for details of the debt. Nothing.

Fast forward to 2008. The debt collection agency send me some copy statements for my MBNA account. The first statement (dated March 2006) already has £140 as a starting balance, and the rest show the application of non payment charges, interest, and increasingly irate messages about me not paying.

The statements are obviously legitimate, but were sent to my old address. I never got them. If I had, I would of course have queried it with MBNA having not used the account, believing it to be cancelled - which it obviously wasn't. I suspect that MBNA sent a new card to my old address and someone got hold of it and used it.

The debt collection agency are threatening legal action to recover the debt.

I've asked them for earlier statements to find out what the original charge to the MBNA account was, but haven't heard anything.

I have two questions:

(1) If the original charge to the account was fraudulent, am I liable for the debt because I did not report the fraud to MBNA soon after it occurred (becuase I didn't receive the statement so didn't know about it) or is a "defence" of fraud valid for an indefinite period?
(2) Am I liable for the non-payment charges and interest, which were incurred only because I didn't receive the statments so didn't know I should pay anything (or report a fraud)?

Morally, I don't see this as my debt, but legally, it might be a totally different issue. Any help about in regard to these questions, or advice about how to proceed would be gratefully received.

Thanks in advance.

surreysaver

MBNA are terrible at not closing accounts when you ask for them to be closed. Unless you get it writing from anyone that your account is closed, it is still open.

CLAPTON

if the original purchase was fraudulent then you're not responsible for the debt. similarly if the charges / interest are on the fraudulent pruchase then again you are not responsible for the debt.

However, you need to get a full a/c of the card to check exactly whats what.

It may be you have a recurring payment authority (e.g. card protection ) or you had a small balance when you closed it and the charges etc are on that. I would have thought that someone using it fraudulently would have take a lot more than £230.

NickX

If the DCA cannot produce details of the orginal transaction that has incurred these fees and charges then I do not think the debt is enforceable.

I wonder if there was some "residual interest" on the account that has incurred these charges. If the transaction can be produced and is legitimate then you are liable, but I would advise negotiating with the DCA, and request a lower "full and final settlement" due to the circumstances.

exel1966

Could this be another case of a cardholder authorising CPA's and then forgetting about them ? If a few months after closure a CPA is requested by the retailer the card company will be obliged to accept and charge to your 'closed' account if you've not asked the retailer to stop taking payments. Because they didn't know your new address you wouldn't have known about it.

You paid the balance, but did you have a 0.00 balance for two consecutive months before 'closing' the acount ? Remember that residual interest would have needed to be added if you did not and that would have occurred after you thought you closed the account. Over time with charges this could have easily added up to £230.
Card companies do not close accounts instantly when notified of the requirement to cancel. They are left running a few days/week to allow for any late purchases/charges to be added.

As for a possible fraud I'm not sure how the legalities stand of not advising them of a potential fraud for two years (because you didn't know), but MBNA/DCA have to provide supporting evidence of their claim against you. IF they can't they won't be able to persue the matter.

wuno

CLAPTON wrote: »

if the original purchase was fraudulent then you're not responsible for the debt. similarly if the charges / interest are on the fraudulent pruchase then again you are not responsible for the debt.

However, you need to get a full a/c of the card to check exactly whats what.

It may be you have a recurring payment authority (e.g. card protection ) or you had a small balance when you closed it and the charges etc are on that. I would have thought that someone using it fraudulently would have take a lot more than £230.

Thanks a lot for taking the trouble to reply.

I have sent the DCA a letter recorded delivery asking for the appropriate statements and quoting the OFT guidelines that states whilst I dispute the debt they can't try and collect it without giving me proof I owe the money. If I don't get anything, I might have to go down the Data Protection Act route since I'd rather this did not drag on indefinitely - it's not an issue of me not being able to pay and it's not a large amount of money, it's just the principle of the thing really.

I agree that if it were fraud it should be a larger amount, but since the statement showing £140 owing was more than 2 years after I stopped using the card, I don't know what else it could be. If it were residual interest, surely they would have started applying non payment charges much earlier than 2 years later. And my post was redirected by Royal mail for 12 months after I moved, and I didn't get anything from MBNA in that time.

Which leads me to believe it was a transaction in late 2005, early 2006.

It could be something like insurance, but I routinely decline such things. It could, I suppose be an annual card fee (actually, it would have to be a biannual fee...). That would be ironic!

Anyway, I think I'll carry on as I was. Refuse to accept I owe until they send me statements showing the initial transaction. Then deal with the situation as and when I have more information.

wuno

exel1966 wrote: »

Could this be another case of a cardholder authorising CPA's and then forgetting about them ? If a few months after closure a CPA is requested by the retailer the card company will be obliged to accept and charge to your 'closed' account if you've not asked the retailer to stop taking payments. Because they didn't know your new address you wouldn't have known about it.

You paid the balance, but did you have a 0.00 balance for two consecutive months before 'closing' the acount ? Remember that residual interest would have needed to be added if you did not and that would have occurred after you thought you closed the account. Over time with charges this could have easily added up to £230.

Thanks for your help.

The card was only used for 6 months to transfer a balance onto (0% - back in the days of no balance transfer fees, I did this a lot) and then the balance was paid off in full by transferring it onto another card.

I would have waited for zero balance statements before cancelling the card. Statments long ago shredded though, so only have my Microsoft Money records of what happened on the account.

Also, surely it would have only been a few months before non-payment charges (£25 per month a pop) would have made a small residual balance into £230. That balance wasn't achieved until June 2006 (card closed in Nov 2003).

I suspect the account simply was not closed when I asked but because of zero balance I wasn't sent any statements (which would have been redirected to my new address) to alert me of this fact until the balance became positive after some transaction two years later, by which time the redirection of my mail had stopped.

I'm thinking fraud, some sort of insurance that I didn't think I'd asked for, or a card fee.

Paul_Herring

wuno wrote: »

Moved house and instead of sending them a change of address notification, sent them a letter asking for the card to be cancelled.

Did you get confirmation of this closure in writing? (And why didn't you get your old post forwarded to your new address/just change your address in the cancellation letter?)

wuno

Paul_Herring wrote: »

Did you get confirmation of this closure in writing? (And why didn't you get your old post forwarded to your new address/just change your address in the cancellation letter?)

Thanks for your input

The letter I sent would have asked to cancel the card and would have said "If you require further information, please use my new address:......" I don't have a copy of the letter I sent, because I just used a standard Word file and changed the account information at the top each time I sent one out - which was for quite a few different cards at that time (when I moved house, I paid off a load of cards using part of my mortgage advance).

I suspect they didn't receive the letter, or lost it internally, so neither the request to cancel, nor the new address written on it were noted.

I had my mail forwarded at source by Royal mail for 12 months after I moved house anyway.

I don't have confirmation that the card was cancelled. My husband also cancelled his MBNA card in the same way and at the same time (two different letters were sent in the same envelope, which I suspect is what has confused them) and whilst he did not receive confirmation of closure, his account was definitely closed; In 2006 when this thing first started, MBNA confirmed the date of closure of his card as November 2003, but would not give me any information about mine.

methusala_2

Hi Wuno
You could obtain a credit report from Experian or such. It will still show your file from your old card as they hold records on your file for 7 years. It will show you if and when the account was reported to them as " Settled " and that would confirm what month your card account was or was not fully closed.
Another thing I always do when closing a credit card acount is to fully clear the account and then " lose the card". This has the effect of cancelling all recurring payments set up on it, and have to be re-newed by you on the new card. When the new replacement card ( with its new number )arrives, I ring to close the account. Of course it wont cancel any residual balances and charges still applicable to the account.

benf90

methusala wrote: »

Another thing I always do when closing a credit card acount is to fully clear the account and then " lose the card". This has the effect of cancelling all recurring payments set up on it, and have to be re-newed by you on the new card.

Just a note of caution, that won't stop all recurring payments from going through. It may stop some, but not all.

Although the card is 'lost' the details will still remain on your card providers system and will show as valid details to any retailer. When a normal transaction is attempted it'll be declined, but CPAs are different.

When a transaction is attempted there's a code which identifies the retailer/transaction type, what type of business it is etc. CPAs / recurring payments have their own unique code which identifies that transaction as a subscription. So, the rules about whether it is authorised are different and the fact that the card is 'lost' may make no difference as to whether it's authorised or not.

If the CPA has gone through on the card before it can still be authorised using the old 'lost' details. The card provider will simply authorise the payment and then debit it from the new card details, as they're 'linked' to the old card details on their system.

In effect, the authority given to the retailer is to take the payment from a specific credit card account. The fact that the card number has changed doesn't alter the fact that it's still the same credit card account, of which the retailer has permission from you to take payments.

It's cropped up a couple of times on this forum where people have believed that reporting a card as lost automatically cancels any CPAs. The only way to be sure for definate is for the retailer to cancel it themselves, which you have to ask them to do. Or even better, don't set one up in the first place if it's avoidable.