payment taken when card closed

percy

I closed our egg card in june last year by making a balance transfer to another card and informed egg that we were closing our account.then had an email from them confirming this. i noticed on our bank statement last month that a direct debit had gone through to egg and had done so for the last 3 months.when i called egg for an explanation i was told they would look into and call me back.no call received but after 4 other calls from me i did get to the bottom of it. it seems we had an annual direct debit to the aa which we had not cancelled and when presented to egg in march this year they had paid, so we then had a balance which we were unaware of and which was gathering interest as egg were taking the minimum payment. can they do this ?? ok it was our mistake not to inform aa of change of card but surely egg should not have paid this which would have resulted in aa writing to us to jog our memory.
egg are adamant that they have acted correctly but i find it crazy that they can do this after an account is closed, as i pointed out a bank would not honour a cheque on a closed account!
oh and there excuse for not contacting us....our phone has call barring so would not accept their call!! haven't they heard of royal mail??
I have now paid off what we owe for the payment but am reluctant to pay any interest charges although threy say i have to.
any suggestions other than how silly i was not to inform aa of change of card????!!!
oh and aa is the roadside recovery service not alchoholics anonymous!!!!

Cara79

I think this is scandalous. I have heard of it before though unfortunately.

I think as it was a direct debt you are liable and I note that you have paid this. With ref to the interest charges, I don't think you should have to pay. If they accept the payment, then they should accordingly send you a statement so you can at least pay it off.

Perhaps someone else knows if the interest can be successfully challenged?!

Good luck

deanos

Yes they can take payment on a closed account, crazy but true

exel1966

What you had with the AA was a CPA -continuous payment authority- (may be called something very similar to that) and not a Direct Debit.
CPA's can only be stopped by the companies holding the authority, not the cardholder. If you have evidence from the AA that your membership had been cancelled then you will be able to claim this back.
When setting up recurring payments with any organisation it is best not to use a credit card as you have found out.

YorkshireBoy

Cara79 wrote:

I think as it was a direct debt...

It wasn't a direct debit. It was a Continuous Payment Authority.

Egg_Card_Credit_Agreement wrote:

20.5 After this Agreement has ended you should ensure that no Transactions are made and that any continuous payment authorities or standing instructions are cancelled by telling the recipient of the payment to cancel them.

http://new.egg.com/visitor/0,,3_11087--View_1068,00.html

Perhaps someone else knows if the interest can be successfully challenged?!

I wouldn't have thought so.

Egg will say that the OP should have read his T&C's, cancelled the CPA, and checked his bank statements more frequently/thoroughly.

The OP should be thankful of Egg's policy of insisting that you have a direct debit set up...and also thankful that they weren't 'on the ball' enough to cancel this DD with their bank once they'd given instruction to close the card.

If this had happened with most other credit cards, then the OP's credit file would have been damaged by 4 missed payments in successive months. Even worse, if this had continued for much longer the account would have been placed in default.

In light of this, I'd say that Egg have done the OP a big favour and the OP should pay up before either a) the costs escalate, or b) their credit file is affected.

jonesMUFCforever

Cara79 wrote:

I think this is scandalous. I have heard of it before though unfortunately.

I think as it was a direct debt you are liable and I note that you have paid this. With ref to the interest charges, I don't think you should have to pay. If they accept the payment, then they should accordingly send you a statement so you can at least pay it off.

Perhaps someone else knows if the interest can be successfully challenged?!

Good luck

The point is that it is NOT a Direct Debit but a continious authority, between the cardholder and the AA.
Did you get the monthly reminder from Egg that your statement was ready for you to see?

The_Boss

Yep, I cant add much else except they were perfectly entitled to do this.

You need to cancel all standing orders, direct debits and other payments when closing an account - closing it alone does not make the payments go away!

Dazza.mk_2

When you cancel a card the issuer usually tells you tomake sure you have cancelled any subscriptions etc.

In practice if a payment is made to your account after it is closed (think for 12 months but might be slightly longer) The Continuous Payment Authority effectively re-activates your account

percy

Thanks to all for your comments. I have successfully challenged Egg re interest and they have waived this. Reading through their t and c though I have to say it was not very clear about C P's.I will certainly be more careful in future.!

Astaroth

Thankfully (for some) the rules on CPAs are due to be changed so that they are much closer to the DD methodology. For a CPA there isnt actually anything "set up" with the card issuer but simply a single first transaction goes through as normal and then subsequent transactions are tagged as being under a CPA - the card issuer only checks that there has been a previous transaction to the company and will then pay it.

The problem is that if the card issuer refuses to make the payment then the customer can get into all sorts of problems - car breaks down and then the AA refuse to come out as the cover has been cancelled for non-payment, you get fined by your book club for a declined payment, your car insurance is cancelled due to no payment which means you get loaded to the fraud registery for No Intent To Pay and you have to go to specialist insurance company that charge 10x the premium for the next 6 years (or longer)

I think Eggs waiving of the interest as a good will guesture (I wouldnt see it as a "successful challenge") is fair play to them for good customer service especially as you are no longer a customer.

If you cancel the credit agreement and not just the account it will prevent future payments going through but then you have all the types of issues I highlighted if you forget to update any CPAs