When Automatic Payments Won't Stop

Here’s what you need to do when a vendor won’t stop billing your bank account automatically after you ask them to quit it.

First – contact the merchant to tell them to stop billing you.

No means no – After you tell them a recurring charge isn’t valid, the bank has to block all future payments. If they tell you only the merchant can do it, they’re wrong.

You have 60 days …After receiving a statement to contest an automatic payment and get it refunded

Don’t stop till the body rock – if you’re getting static from a low-level employee, escalate escalate escalate.

How to Stop Rogue Automatic Payments [NYT Bucks Blog]

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  1. georgi55 says:

    5. Don’t ever setup automatic payment again unless it’s going to a credit card

    • FatLynn says:

      I have an EFT for my mortgage. Trusting a mortgage company is probably a bad idea, but I really can’t imagine a situation where I wouldn’t want to pay my mortgage one month.

      • georgi55 says:

        The scary part is when one payment turns into double payment due to “system error” and it takes 2 weeks to correct it and get the money back. I can take few hits of double charged phone bill or electric bill to my account, but double charge of my mortgage? I won’t fair too well. The double charge alone might not put me into overdraft, but other big monthly payments like paying off credit cards may hit me and those will carry double penalty, one from bank and one from the credit card company.

        This is why I never setup anything to auto-debit from my bank account, only credit card, or if the merchant doesn’t accept credit card, I do manual payment every month and put a check mark on my excel sheet tracking bills.

        Another idea is to have a low balance free checking account to use if you must have reoccurring debits from your bank. Just setup auto transfer from an online bank into that account a week before auto debit date and if they ever screw up and double charge you, you only have to deal with fixing the account with low balance, and most of your money is available on your primary account. You could also setup part of your your paycheck to deposit there – just enough to cover the monthly bill that are setup to auto-debit.

        • searonson says:

          I have had the double payment happen…. when paying my mortgage by paper check.

          If there is a way to screw it up, it will happen. Doesn’t matter if it is automatic or not.

      • castlecraver says:

        Can you imagine a situation where you wouldn’t want to pay your mortgage twice in a month? How about 10 times the normal amount due to a misplaced decimal point? Can you imagine a situation where you wouldn’t want to pay the NSF fees, be short on money, and do all the legwork of fixing these things when your mortgage company autopay screws up?

        I believe I’ve seen all of the above written about on here. You’re trusting them to take what they want, when they want, and not make any mistakes. That’s a lot of trust.

        • georgi55 says:

          Arg, you beat me to it, that’s what I get for using Preview, haha!

        • Shadowfax says:

          All that can happen with non-automatic payments too. I get my statement. I pay by check. Because merchants can now digitally deduct a check from your bank account, when they hit “pay” twice, or misplace the decimal point, etc, and cause the exact same problem.

          I’m not saying automatic payments are a great idea, but stupid crap can happen whether you use them or not.

        • ShruggingGalt says:

          Saw a situation where the phone company cashed someone’s mortgage check. Bigger companies don’t even look at the check before cashing it.

        • webweazel says:

          I heard of a friend-of-a-friend quite a few years back where their mortgage company pulled out TWO mortgage payments in ONE month, on purpose, with no notice whatsoever. When he called to see what the hell was up, they said THEY wanted people to get AHEAD of the payments. (Totally bizzare, and probably a lie.) You can guess what happened to this guy’s bank account in the meantime.

      • mmmsoap says:

        Setting up an auto payment from your bank is different than allowing the mortgage company to have the routing number of your account and automatically deducting money. Unless I’m wrong about this? It has always seemed safer to me to use my banks online bill pay feature than to subscribe for the same thing on the payee’s website.

        (For example, Charter gets paid every month, but I manage it from my bank’s website rather than from Charter’s.)

    • Loias supports harsher punishments against corporations says:

      6. Don’t live your life based on what might happen 0.03% of the time.

      • George4478 says:

        Huh.

        Like having car or fire insurance? Locking your doors when you’re not home? Or any of thousands of things people do to reduce risk?

        • Loias supports harsher punishments against corporations says:

          False analogy. The chance of serious injury or death due to a lack of seatbelt is extremely high – not 0.03% (which is just an example of a low probability). Also, statistically you WILL be in a car accident in your lifetime.

          However, the statistics on how many people, in their lifetime, have a a rogue autopayment (or any rogue payment) divided by the statistics of THOSE people who then have adverse effects due to the rogue payment (i.e. fees, bank hassles, etc) is so small that it does not justify having absolutely no autopay installments at all. Further, the protections under law further the ridiculousness of such irrational fear.

          • mszabo says:

            I’m not convinced of your statistics there. In the 15 years I’ve been out of school I can think of at least 5 independent banking errors made with my accounts and I have always paid everything on time and had have yet to have an overdraft. I’ve been in one car accident over the same period of time.

            So I don’t know, without evidence, how you could assume that the # of autopay errors would be less than the number of car accidents.

            My bank errors off the top of my head:
            1.Student loan repeatedly screwed up payments by arbitrarily applying them to either balance reduction or future payments. Causing lots of various late reports on my credit card.
            2. at one point they screwed up bad enough to send the bill to collections even when I was up to date. Upon getting to collections the balance was not even close to the true figure.
            3. Credit card company accidentally moved me to Utah.
            4. Bank sent me tax forms with SSN/name/address of a different customer.

      • Don't_rip_me_off_bro says:

        Do you wear a seatbelt?

    • ARP says:

      Nuance- It’s OK to sign up for “pushed” automatic payments (e.g. you set up recurring payments through your bank), but not “pulled” payments where they take the money out of your account).

      • sonneillon says:

        Controlling the money gives leverage. If they want to be able to pull payments. Then they need to cut me a deal. They are reducing their risk without giving me something in return for the reduced risk.

      • sonneillon says:

        Controlling the money gives leverage. If they want to be able to pull payments. Then they need to cut me a deal. They are reducing their risk without giving me something in return for the reduced risk.

  2. spmahn says:

    Make sure you report fraudulent automatic payments as soon as you see them, unline EFT Debit Card transactions, there’s a time limit on when you can report ACH Auto Debits, for business accounts it can be as short as two days.

  3. Rectilinear Propagation says:

    6. Close the account
    It’s a hassle but you probably don’t want to have your accounts at a bank where they’ll refuse to stop fraudulent payments.

    • Donathius says:

      The nasty thing with that is that SOME banks will reopen closed accounts when a payment against the account shows up. I know there have been Consumerist stories in the past dealing with that exact issue.

      • Pax says:

        That’s why you demand a signed document indicating that the account is CLOSED, and you ar no longer responsible for what the bank does with it.

  4. Dover says:

    “No means no” – Sounds like this law applies to bank drafts (and potentially debit cards), but not credit cards.

  5. Garbanzo says:

    What the heck does “Don’t stop till the body rock” mean? Is that something the young people are saying these days?

  6. winnabago says:

    Love the one in the article’s comments about a problem the person had with Consumer’s Union autobilling!

  7. fmatthew5876 says:

    0. Never sign up for automatic payments

    • parabola101 says:

      I will never never again sign up for automatic payments again! I have been burned too many times by this “feature” it’s just a very bad consumer option. You will spend countless hours trying to stop payments, or double billing and the bank (BOA) will sit and do nothing except tell you to talk to the vendor…

  8. NikonGal says:

    I pay most of my bills using the “bill pay” option at my bank. Even if I set it up as a recurring payment, I still have complete control over when the payments are sent, and the amount. And I can stop a payment from being sent all the way up to the day it’s scheduled to be sent.

    I monitor this constantly, and I also use an excel spreadsheet to keep track.

    Using this method, I have never had a problem. I would never set up an automatic payment by giving someone else access to my account. That is asking for trouble.

  9. SWilson says:

    To clarify on “No means no – After you tell them a recurring charge isn’t valid, the bank has to block all future payments. If they tell you only the merchant can do it, they’re wrong.”

    Per the ACH rules, the bank does not have to block all future transactions based on authorization revoked. To block all future transaction, you need to pair your unauthorized ACH return with a stop payment. With recent Reg E changes, the bank is required to maintain the stop payment until you tell them to take it off.

    More clarification on why the bank doesn’t have to block all future transactions based solely on the return: In the ACH world, if a receiver returns a transaction as authorization revoked, the originator of the transaction may not continue to send the same transaction until they obtain a new authorization. Now if an originator sends the same transaction again after receiving the authorization revoked return, then the originator is violating the rules. The receiving bank should notify the originators bank. In my experience, that fixes the problem 99% of the time.

    Let me get up on my high horse: Getting any of this done for you at a big bank is nearly impossible. They don’t care. Not because they are jerks or malicious but because they are too big. Move your money. Your local credit union or S&L will take care of you. More than likely, they will take care of any issues for little to no cost.

    Stephen – Your friendly AAP

  10. travel_nut says:

    I’d love to not have my mortgage on automatic billing. But I don’t trust the mail system with a paper check (sometimes it takes 2 weeks for the check to get there, other times it takes 2 days, and occasionally it never shows).

    My mortgage co. won’t let me use my bank’s online billpay–they flat out will not accept it
    They charge $10 to pay online
    They charge $14 to pay by phone
    The only option that doesn’t cost me money is to use their automatic draft.

  11. travel_nut says:

    Also, my gym, my home security system company, and both DH’s and my life insurance companies ONLY accept automatic draft. There are NO other payment options available.

  12. Loias supports harsher punishments against corporations says:

    Yeah, sure. Just never do autopayments. Live in fear over every statisticall improbable occurance of negativity. Don’t ask that girl out, she might say no. Don’t invest, you might lose money. Don’t leave the house, you couldn’t possibly calculate the number of things that could go wrong. Just kill yourself now, since every moment you’re alive brings you one moment closer to some inevitable bad event.

    Come on, people, this doesn’t happen everyday, and there are methods – both practicle and legal – to remedy this situation. There are extreme occurances, no question, but those should not base how you live your life.

    • Rectilinear Propagation says:

      But asking someone out, investing, and leaving the house all have benefits.

      What’s the benefit of automatic payments where you’re letting the business pull from your account? How is that better than just using bill pay where you can set up recurring payments and stop them anytime you want?

  13. Silverhawk says:

    Like many other posters, I’d advocate not doing automatic payments, unless they’re initiated by yourself from your own checking account. Then you have direct control over altering or deleting said recurring payment.

    I have done automatic payments with a vendor/service provider exactly twice, and both times I got screwed when I canceled the service, and continued to get charged. One time was just a simple clerical error that was solved with a phone call, the second was intentional. I had to block the payment with the bank, which they did. So the next month the provider changed the amount, and the payment went through. Then they changed their name and did it again the following month! Threats of legal action got it to stop, and I noticed the business closed soon after. I think they’d been hurting for cash flow and had done it to a number of customers.

  14. Skazaam! says:

    I had to set up an auto pay with the gym I used to go to but I haven’t been in months and want to cancel but I’m so anxious about the runaround I might get. Better to deal with the bullshit than keep paying $20 a month for something I don’t use. The only other thing I have on auto pay is Netflix, because I’m not even sure if they have any other option available.

    • Copper says:

      Netflix charges your credit/debit card instead of pulling from your bank account directly. This is different and better because if you cancel the card number, they won’t be able to pull money. If I don’t have money in my checking account when Netflix is due, it will just deny the transaction since I don’t have the overdraft crap.

  15. menty666 says:

    This is the number one reason I never ever ever set up automatic payments.

  16. DanKelley98 says:

    At what point does this not become “theft”?

  17. ldub says:

    This will change as more people do their banking/bill paying online and as more companies offer ‘pulled’ automatic payments. When these kinds of financial transactions are as ubiquitous as automobile driving, you can bet that the frequency of this problem will increase.

    In the meantime, since I do all sorts of things that have the potential of causing me a problem, I’ll do what I can to reduce my risk in each circumstance. The convenience of the automatic payments does not outweigh the hassle should it go wrong, for me. YMMV

  18. Tomas says:

    Only company that ever auto billed me after having autopay shut down was Comcast (I know, I know, but they were my ONLY high-speed internet / cable TV choice).

    Since they billed me (direct from my checking account) over 30 days after being told in writing to stop, and confirming that they would, and 9 days after I had paid the bill manually, they were in error.

    Comcast refused to correct the problem / return the money, saying they’d just hold it to use as the next month’s payment.

    That was unacceptable to me (I really did have other uses for that $120 missing from my account), so I contacted my bank and had them mark the Comcast charge as unauthorized and return the money to my account.

    THAT got Comcast really excited, and garnered an irate call from their accounting telling me I couldn’t do that.

    My response was not only CAN I do that, I DID that. I told ‘em since they couldn’t take care of their error, I would.

    We ended up on a three-way call with the bank and my rejection of the autopay as unauthorized stood.

  19. perfectly_cromulent says:

    interesting….I work at a bank and I’m instructed to tell them that the merchant is the one who can stop the auto pay, otherwise we can dispute the charges. Most the time I advise to initiate a dispute then get a new card # since that merchant is obviously untrustworthy.

  20. Boo LaRue says:

    Just recently I have had a similar problem involving XM Satellite radio automatic billing (surprise!). I cancelled my service and, the following month, they still billed me for the next go round of service. When I asked my credit union if there was anything I could do to keep them from billing me again in the future they told me that my only option was to cancel the current debit card tied to my checking account and get another. Just doesn’t sound like it should be that difficult to me.

  21. wagnerism says:

    What about automatically billing the previous credit card? XMRadio did that to me despite me only wanting to renew one radio instead of two.

    I called to cancel the second one and they sent me a bill for year’s renewal on the first when I was expecting a refund.

    Do NOT let XM Radio automatically charge your card or deduct from your account. In my three years with them they never got a bill right and I canceled them two years ago.

  22. dush says:

    Why people let companies stick their hand in their accounts in the first place is beyond me.

  23. AndroidHumanoid says:

    I once had a coworker her worked at a bank, and I told her of my problem with Gold’s Gym. They kept pulling payments out of my bank every month, even though I had already turned in my service cancellation paperwork at the exact time my contract specified. Her exact words were “Don’t EVER sign up with anyone, who recieves payments by directly deducting it from your bank account!”