Credit Cards Allowing Transactions After Closure

eskavon

Dear all
I'm new to the message board and have been prompted to write after something very disturbing happened at the weekend. I received a letter from Egg to say I owed them money for my credit card - this concerned me as I'd closed the account over 3 months ago. First thought .. identity fraud.
It turns out an insurance company (E&L pet and equine insurance) deducted money for a policy which they claimed was a direct debit. The thing was I hadn't renewed the policy. And the insurance company said I had to formally write to them to close it (even though it was up for renewal) otherwise they automatically deducted the money and continued the policy.
Egg said they automatically processed 'direct debit' payments even if an account is closed.
Very worrying and the worst of it is that I now have to wait 7 to 10 days to get a cheque back from E&L so that I can pay egg - E&L won't refund my card. And to add insult to injury Egg were going to charge me interest.
As you would expect both companies now have a flea in their ear!
Please beware and if closing credit cards make sure you say you want the account blocking.
Eskavon

Reaper

Egg is completely correct in what they have told you, except that it is not a DD. Credit cards can not have DDs set up on them, instead they have CPAs (Continuing Payment Authorities). Although they may look similar they are not.

As you discovered closing your card is not sufficient to stop them. If Egg gets a valid payment demand they are forced to reopen your card and make the payment, and you are liable to repay them.

Egg is correct saying the only way to stop it is to contact the orginal company and cancel your policy. In fact Egg have been generous not charging you interest too.

Read this article and all will become clear. It's scary though!

Altarf

Anybody who sets up a continuous credit authority for a credit card is bonkers.

Galstonian

If you notify the company that you wish to terminate the agreement and copy the card issuer then the agreement must stop and they can no longer take any money. I use CPA for some things as I am offered discounts to do so. I am not bonkers. It is advisable to make sure you know when a CPA is set up (often for annual payments, e.g. insurance premiums) and record the details so you cancel if you want.

Caped_Avenger

Altarf wrote:

Anybody who sets up a continuous credit authority for a credit card is bonkers.

I might not go that far, but compared to all the protection you get with a DD, it isn't the wisest move.

Galstonian

You cannot stop payments if you have given authority, you can revoke your authority. The same protections for purchases apply to CPA as to all other credit card purchases. To say it is not wise is missing the point - you need to be aware of what you are doing and in control of it as much as you can. I believe the problem comes from a) retailers who bury the CPA in a mountain of small print and b) customers who do not read the small print. In the example above E&L should have advised the customer that they were giving CPA, if they did not then they do not have the right to take payment. If they tried to conceal it then it is not a good business practice but ultimately it is the customers responsibility to read what they agree to.

I have yet to hear of an example of CPA being abused where authority was revoked and payments were still made.

eskavon

Thanks Glastonian
It was all very well buried in the documentation and no-one informed me it was a CPA. I try not to be bonkers and try to protect my money. Which is why I closed the card.
Some may say (and I'm sure they will cos some replies are harsh!) that I deserve what I got but even with the utmost vigilance sometimes you get caught and why should we always have to be on high alert and expect the worst. But I guess this is the way of the world.
Anyway thanks for your replies and will keep watching for money tips and scams to be wary of.
Eskavon

Altarf

Galstonian wrote:

I believe the problem comes from a) retailers who bury the CPA in a mountain of small print and b) customers who do not read the small print.

So to have some protection the consumer has to wade through the legal mumbo jumbo that the helpful companies using Continuous Credit Authorities use, in order to spot the traps.

Or they pay by DD.

Simple question. Why don't CCAs have the same protection as DDs. Is it because the companies using them want to make it difficult to cancel? No surely not, that would be the sort of thing a fraudster would do.

Sorry I still think anybody who signs up to a Continuous Credit Authority is bonkers.

Galstonian

But you DO have similar protection.

If you have cancelled the service (and it is usually services that set up CPA) then they have no right to payment and you can dispute it with the card issuer. A similar problem would exist for a policy with an annual direct debit. The simplest method is to ask "are you going to keep my card details on file?" and if they say yes ask that they do not or immediately write and revoke their authority (cc the card issuer).

I think anyone who passes up sizeable discounts because of unfounded fears over CPAs is bonkers.