Cancelled card springs back to life - anyone else had this?

sk_ayers

We are writing from Australia because we’d like to share our recent experience with HBOS credit card services.

Back in 2008 / 2009, attracted by a good rate and after reading advice on this site about switching credit cards, we successfully applied for a HBOS credit card. In March 2009, we decided to consolidate our cards and cancelled this one prior to selling our house in London (we were preparing to emigrate to Australia).

We are pretty shocked to find out recently from our family back in the UK, who were reading our redirected mail, that Halifax have sent us new cards and were demanding we pay a £495 balance on our closed account. When we looked at the account online, we discovered that our old car insurer from 2009 had put through an automatic policy renewal in late Jan 2010 (just prior to us emigrating) despite my husband phoning up and asking them for proof of no claims as he was about to insure with another company. This was obviously done without our knowledge because they took a payment from a card which (as far as we were concerned) no longer existed.

What shocked us though was that despite the fact that the account was closed (and Halifax admit that it was closed at the time that Elephant tried to take payment), Halifax still honoured the payment instead of refusing it and asking Elephant to clarify with us (which is what would happen with your bank account). HBOS then proceeded to send us new cards and a chaser letter for payment, which eventually reached my extended family in the UK via redirected mail, which luckily we still had after moving out of our old address in July 2009.

They are now refusing to help us in any way with this and claim that we have to chase up Elephant to organise the reimbursement and that we are liable for the interest accrued. I do not recall seeing anything in the small print when I signed up for the credit card warning me that the account could be reactivated without my knowledge and payments taken without my knowledge or consent. I am also angry that HBOS would not agree to wipe the charges if Elephant subsequently reimbursed them.

I wonder how many others are aware of this in an age where people are regularly switching cards for the best rate. How many would think again if they knew that an old card that they thought was closed could be reactivated? I am not even certain if this practice by HBOS is above board.

Would be interested to know if others have shared our fate – and would be grateful for any advice from anyone who knows how we should deal with this (from Oz!).


Thanks everyone!

preable

Call the insurance people and ask them about it then call halifax and say you are refusing to pay them the money as the account was closed and you are not liable for that account anymore.

sk_ayers

Tried that already but Elephant are dragging their heels saying they have to listen to all their recorded tapes (because they deny that we told them that we didn't want to renew despite sending our new insurer confirmation of our no claims!) and meanwhile Halifax are charging us interest on this.

I have told HBOS that I am not paying because I am not liable for Elephant's mistake. However, they didn't seem interested or helpful.

And of course it cost me a small fortune on the phone from Oz!

sk_ayers

I was most shocked at the point where HBOS customer services told me that they "had to honour" a payment even though the account was closed when I challenged them about it. Surely this cannot be correct!!

preable

Tell them no that your no paying and if they insist thet you have to get legal advice or pay it and take elephant to the small claims court.

Paul_Herring

sk_ayers wrote: »

I was most shocked at the point where HBOS customer services told me that they "had to honour" a payment even though the account was closed when I challenged them about it. Surely this cannot be correct!!

It's entirely correct. When you originally signed up with the insurance you were not entering into a one-off transaction, but a recurring-payment - see here - (which Elephant should have cancelled when you rang them up.)

This arrangement is not unusual with motor insurance (amongst other offenders.)

HBOS are required to 'honour' the payment under this arrangement.

Eydon

Sorry, but this is yet another example of why Continuous Payment Authorities are a bad idea if you don't keep on top of them.

Unless you specifically cancelled your insurance policy with Elephant (and asking for proof of no claims isn't really cancelling the policy) then Elephant will have done an automatic renewal (quite common in the insurance industry).

HBOS will have had no choice but to honour the payment - because it was already authorised when you first gave Elephant you card details (that's what a CPA is - they are still honoured even on 'closed' accounts).

HBOS are correct in that they have done nothing wrong. I'm afraid that the fault lies either with you, for not explicitly cancelling your insurance with Elephant in accordance with their terms and conditions, or with Elephant for mistakenly putting through the payment request after you had cancelled.

You need to keep on at Elephant to confirm who was at fault. Hopefully you will have kept the written confirmation from Elephant acknowledging your request not to renew your insurance.

BoGoF

There seems to be a misconception that cancelling the account will stop any further transactions - not so. Your gripe is with the insurer not the card provider. Really boils down to the fact, are you certain you told them you did not want to renew? The fact you sent evidence of your no claims to another insurer proves nothing I'm afraid.

JasX

I've had capital one do the same thing to me on a post office house insurance policy.

Got some idiot american clearly with no knowledge of UK financial matters tell me because it was a regular insurance payment cap1 policy was it had to be paid and it was a 'direct debit credit card payment'.

Anyways in my case I got on to the Post Office and they refunded the full amount less about 60p so i left it at that.

Apparently the credit card companies have a habit of always paying insurance on cancelled credit cards as a 'service' in case we're dumb enough find ourselves inadvertently uninsured. More often than not I suspect it doesn't wouk out in the customer's favour and personally would rather see the practice banned.

The really annoying thing is I caught it 4 days before they even presented the payment, called the credit card company and was at that point told it would be paid when presented regardless and any insurance company i'd previously used the card for could take money from the cancelled card in future and there was nothing I could do about it.

bacard1

Personally i would pay it and then argue the toss. It is elephant that you need to sort it out with. If your mail was being read why did someone not tell you that you had new policy doc from elephant? you could of used the cooling off period back then

sk_ayers

Thanks for all the replies folks.

Elephant are doing the honourable thing and refunding us. Hoping HBOS will do the same. What I've learned from this whole experience is that credit card switching is not without consequences and that "closed" does not mean closed.

I also won't be paying for insurance with a credit card in the future, especially if there is a chance that I will renew with another company. Yes, the mistake has been rectified but it's caused us quite a lot of stress and worry on top of all the stuff we've had to deal with in moving countries.

I think the reason why we didn't get notice of this payment before was because we had signed up to paperless statements with HBOS so no written confirmation came until we had "defaulted" payments. I've also closed my UK email accounts so I guess that is why.

Buyer beware!