Direct Debit drama

phil123456_2

Hi all,

I have a credit card and although there is a DD set up, I always pay off the balance in full before the end of the month separately so no money is ever taken out.

However this month, despite paying it off, the card company took out the balance again by DD from my account.

I called up Halifax and asked for a refund on the same day the DD went out, believing it to be an error as the card company was taking money for a card with a zero balance.

Several people later, they all said I couldn't have a refund of my DD, because it wasn't covered by the DD Guarantee as I had made a separate transaction to pay off the balance by card beforehand (?)

My understanding was that the point of the Guarantee meant I could get a full and immediate refund if either the merchant or bank made an error, however was told that there were 'extra terms' which meant that this somehow did not apply. The Guarantee that I had seen on every website was a simplified version and for some reason, Halifax had their own conditions.

I didn't understand why they were being awkward, or even their reason for refusing, and asked to speak to a supervisor/manager, but the adviser turned around and said that they would action the claim just this once, as if they were doing me a favour.

I asked him to show me where on their website these extra terms appeared but lo and behold, he was unable to do so.

Am I right in thinking that they should have just refunded me without argument, or is there any truth at all in what they are saying?

pmduk

I'd say so yes. I suspect your payment was made after the CC company initiated the DD.

YorkshireBoy

If your statement said the DD would be taken, then that's the notification required. In such a circumstance you cannot make a claim under the DD guarantee because the payment hasn't been taken "in error".


It sounds like you made the payment very late...so late in fact that the DD process had already been initiated - some 3 working days before the payment due date.


But if you always pay manually there was no point in setting up the DD long term. That's because it will lapse at some point through 'dormancy' (typically 13 months/400 days) if not claimed.


And sod's law says this will fall on the one month you're short of money early in the month and are relying on the DD being taken!

Maitane

In cases where Direct Debits are wrongly taken (that includes this - there was a zero balance and so a Direct Debit payment wasn't required), go to your bank and ask them to perform an Indemnity Claim.

The bank return the money into your account and then get refunded by the Service User (the credit card company in this case), you can also apply for consequential loss however this is slightly harder to go for but still worth doing if you have suffered any additional losses.

You can find more about Direct Debit regulations on the Bacs website.

innovate

You have to some extent asked for the trouble by making manual payments. Seems you made a payment so close to the DD date that the CC company could not register your payment before their automatic DD collection got underway. Why, if you are paying off in full anyway, are you not letting this happen by DD? Your CC statement will tell you the exact amount and date the money will be taken.

YorkshireBoy

Maitane wrote: »

In cases where Direct Debits are wrongly taken (that includes this - there was a zero balance and so a Direct Debit payment wasn't required

I'm not sure how you've drawn that conclusion when the OP hasn't said when they made the payment!?


And some providers (MBNA is one, but there are many more) say no matter how much you pay manually the DD will still be taken regardless. They tell you this in the DDI confirmation letter and also on the monthly statement.


And that's pre-notification, so again not covered under the DD guarantee.

phil123456_2

Thanks for the replies. I paid last week and the balance had been cleared by the 24th December. The DD was taken out today.

I will put it down to experience and cancel the direct debit

Be_Happy

Something else to watch out for, that I've learnt from experience:


I've got DD set up for minimum payment so that I never miss a payment. However when the statement comes I pay off the total less minimum immediately. Once I paid off the whole amount on receipt of statement, but the DD still paid out the minimum 2 weeks later.

Aquamania

phil123456 wrote: »

Hi all,

I have a credit card and although there is a DD set up, I always pay off the balance in full before the end of the month separately so no money is ever taken out.

However this month, despite paying it off, the card company took out the balance again by DD from my account.

I called up Halifax and asked for a refund on the same day the DD went out, believing it to be an error as the card company was taking money for a card with a zero balance.

Several people later, they all said I couldn't have a refund of my DD, because it wasn't covered by the DD Guarantee as I had made a separate transaction to pay off the balance by card beforehand (?)

My understanding was that the point of the Guarantee meant I could get a full and immediate refund if either the merchant or bank made an error, however was told that there were 'extra terms' which meant that this somehow did not apply. The Guarantee that I had seen on every website was a simplified version and for some reason, Halifax had their own conditions.

I didn't understand why they were being awkward, or even their reason for refusing, and asked to speak to a supervisor/manager, but the adviser turned around and said that they would action the claim just this once, as if they were doing me a favour.

I asked him to show me where on their website these extra terms appeared but lo and behold, he was unable to do so.

Am I right in thinking that they should have just refunded me without argument, or is there any truth at all in what they are saying?

That's about the long and the short of the guarantee. There are no small print; no "extra" terms.

If a mistake has been made (and your word is good enough on that) and the bank won't issue you wilth a full and immediate refund on request, make a formal complaint under the bank's own complaints procedure.

bengal-stripe

phil123456 wrote: »

I paid last week and the balance had been cleared by the 24th December. The DD was taken out today.

In a normal month that would have been enough time to pull the DD out of the system, but not over the Christmas/New Year season. With all the bank holidays, that only left three working days: Friday 27th, Monday 30th and Tuesday 31st.

My Santander CC (and presumably others as well) does ask for five working days.

Archi_Bald

Be_Happy wrote: »

Something else to watch out for, that I've learnt from experience:


I've got DD set up for minimum payment so that I never miss a payment. However when the statement comes I pay off the total less minimum immediately. Once I paid off the whole amount on receipt of statement, but the DD still paid out the minimum 2 weeks later.

It's just asking for trouble if you set up a DD, and then pay some or all of the amount yourself outside the DD arrangement. As has been mentioned already, some CC companies will, as per their T&Cs, always take the statement sum by DD if a DD exists, regardless of what other payments the card owner chooses to make. But even if they are able to reduce the amount due by DD by any sums paid off some other way, it is sort of obvious that they will need to be able to process the extra payments before the DD process begins - else you might, by your decision, pay the same bill twice. Of course, such double payment would just result in you having a credit on your credit card, it is not money lost.

The only valid reason I can think of for making extra payments is if you want to spend beyond your card limit before the DD for outstanding money has been taken.

Aquamania wrote: »

If a mistake has been made (and your word is good enough on that) and the bank won't issue you wilth a full and immediate refund on request, make a formal complaint under the bank's own complaints procedure.

The DD guarantee states

If an error is made in the payment of your Direct Debit, by the organisation or your bank or building society, you are entitled to a full and immediate refund of the amount paid from your bank or building society

http://www.directdebit.co.uk/DIRECTDEBITEXPLAINED/Pages/DirectDebitGuarantee.aspx

Where in the OP's case has an error be made by the CC company of the bank?

The mistake was wholly the OP's, and they could of course have politely asked whether they can get the money back but not with reference to the DD guarantee.

The OP had authorised the CC company to take the money by Direct Debit. The CC company couldn't possibly sense that the card holder eventually didn't actually want them to take the money by DD but instead pay the bill by other means.

Anyway, they got their money back and have hopefully learnt a valuable lesson.

phil123456 wrote:

I will put it down to experience and cancel the direct debit

Make sure you understand what exactly you are doing. Check your T&Cs. Normally these state that if you do not pay by DD, it is your responsibility, and yours only, that the money has actually arrived in your account by a given date. You are introducing the risk of late payment charges and CRA file markers because your payments you make can take longer than you think they should take to be reflected on your account. You can remove this risk completely if you let the CC company collect the money by DD. If you don't interfere yourself, all will work like clockwork.