Subscriptions and recurring payments are the hot thing these days. From political donations to arts patronage, from subscription boxes to student loans, everyone wants a scheduled monthly slice of your money. And that’s all well and good, as long as you actually want what they’re selling. But what happens if you change your mind?
Any recurring pledge, payment, or subscription you make will have some terms and conditions on it about when and how you can cancel, and what kind of refund, if any, you can expect if you do. You would expect, though, that you can cancel — and that when you do, they properly stop billing you going forward.
Alas, both these things are not always true. You do, however, have rights. You should be able to make the payments stop — and if you can’t, you can get help.
There are laws protecting consumers on both half of the recurring transaction: laws applying to the retailers who charge them, and laws applying to the banks that let them process.
On the “stuff” side, we have the FTC.
Subscriptions for monthly stuff are not new; anyone who can remember the 1980s and 1990s remembers Columbia House (8 CDs for a penny!), and they were far from the first. The hundreds of subscription boxes now on sale online, covering everything from lipstick to this week’s dinners, are following in an old tradition.
Happily for consumers, there is specifically a law protecting them from certain old traditions appearing in the new, online world. The Restore Online Shoppers’ Confidence Act of 2010 (ROSCA) protects consumers from shady marketing and sales tactics specifically on the internet, which is handy since in 2016, that’s where you’re likely to have signed up for them.
That thing where you will be automatically billed for the next shipment of [X] unless you opt-out in time? There’s a term for that, and it’s called “negative-option marketing.”
It’s legal to do, but a company doing it on the internet has to meet a few standards. Specifically, according to the law, anyone doing it has to:
- “clearly and conspicuously” disclose all the terms before getting your billing info
- get your explicit, informed consent before charging you at all, and
- provide “simple mechanisms” for you to stop the recurring charge from hitting.
When you don’t, well, the law comes for you.
Negative-option retailers aren’t the only ones you might be paying on a recurring basis, of course. You may subscribe to a publication, support an artist through a patronage site, donate to a political organization or nonprofit, or do an untold number of other things with your money. The important thing is this: if you are automatically billed for something, without actively, yourself sending away the money in some fashion, the CFPB’s got your back.
A slice of law called Regulation E governs electronic transfers.
That law, among other things, limits your liability when a transfer isn’t authorized. That means, if you haven’t said it’s okay, or you say to stop, and someone keeps doing it anyway, you’ve got a clearly outlined recourse.
So what do you do if you don’t want to be signed up for a recurring membership, subscription, or donation anymore?
1. Cancel the same way you signed up
It may sound silly to include this, but it really is your first step. Did you sign up online? By phone? Reach back out to the organization the same way. If that doesn’t work on the first try, you may need to assemble your records, find your zen, and try, try again.
If you do cancel but the bills keep coming afterward, or if you cannot reach anyone who will actually process a cancellation, that’s where things get tricky.
1a. Dot your i’s and cross your t’s
Revoking an entity’s permission to automatically debit funds from your account is not the same as cutting off your relationship with that entity to avoid future charges.
As the CFPB puts it:
Cancelling your automatic payment does not cancel your contract with the company. If you want to cancel a contract for a service, like cable or a gym, be sure to cancel your contract with the company as well as telling it to stop automatic payments. If you cancel an automatic payment on a loan, you still have to make payments on that loan.
In other words: cancelling auto-deduction is not the same as “not being billed anymore.” Make sure, if you explicitly have to end a service or contract, that you do.
2. Start writing letters
It might not be easy to cancel, but you’ve still got the right to. You just have to approach it from the other end: by revoking their authorization to bill you.
If the payment is a recurring debit from a bank account, the CFPB’s advice to you is to write letters to both the business doing the debiting, and the bank your account is with.
In those letters, you are explicitly revoking your permission for the company to take the money from your account. Not sure what to say? The CFPB has you covered, with sample letters of both kinds (company, bank) available online.
After you’ve written and posted those letters…
3. Call and tell them
This isn’t a call where you ask to cancel please; this is a call to the business, and your bank, where you straight-up inform them that you have revoked authorization, period.
Make note of when you call and who you speak with; if the charges appear again afterward, you’re going to want that information when you follow-up.
But if that doesn’t work…
If a charge appears after you’ve revoked authorization with your bank, and notified both parties that you revoked authorization, you can dispute the charge basically in the same way you would any other fraudulent charge. How long a dispute might take, though, depends on if it is a bank account or a credit card being billed.
If it’s a bank, you have a 60-day period in which to dispute the charge and receive your money back.
After you report the charge, the bank has 10 days to investigate, and then three days to report its findings to you. The situation has to be resolved in a total of 45 days from your complaint.
If it’s a credit card, you still have a 60-day period in which to dispute the charge. But after that, the card-issuing bank has 30 days to acknowledge that it’s received your dispute, and then has two billing cycles, up to a maximum of 90 days, to resolve the situation.
And if all else fails…
If you’ve cancelled the service, revoked authorization, called your bank, and are still getting auto-billed, it’s time to call in help.
Regulatory agencies are here to help you if the companies you work with are behaving unlawfully and taking your money when they shouldn’t be.
You can file a complaint with the CFPB online or by phone, when it comes to the billing end.
And you can complain with the FTC online or by phone to complain if the original entity doing the billing is behaving in a misleading way.
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