Cancelling direct debits from credit cards

[peslis99]

I need some advice please. I rang my bank to advise that I wish to cancel a direct debit from my credit card, but they informed me it cannot be done. I have already written a letter to the merchant and the merchant has acknowledged and committed to cancelling the DD but I just wish to ensure this goes through so had wanted to inform the bank also.

The bank advised that all I can do is wait and see and if the account is debuted again then contact them and fill in one of those forms for a reversal and they could contact MasterCard who once are involved, it would be cancelled. This sounds ludicrous to me. It appears that the control is completely out of my hands and with the merchant and I am at their mercy having to wait their next move rather than being proactive and having the ability to control my own finances. I asked the banking officer 3 times why I couldn’t they couldn’t simply cancel it over the phone with me, and each time she simply sympathized and said it couldn’t be done!!!

Could somebody please explain this to me and is there anything else I can do? Thanks.

[Fred123]

The reason is because you have given the merchant authorisation to debit your card either in writing or electronically, which they have forwarded to your bank.
The bank was not involved in the authorisation and hence cannot cancel it.
Apart from expecting the merchant to do the right thing, your other option is to cancel your card or get the card number changed.

[PhilT]

I could add many words regarding my esteem for your banking officers not providing you more useful information; this page should assist.

Note the differences between a direct debit and a direct debit to a credit card and the implicit linkage to contracts law re payments.

http://www.moneyhelp.org.au/tools-tips/cancelling-a-direct-debit/

[PhilT]

which they have forwarded to your bank.

They do not actually send anything to the bank, they tick the box telling the bank they have one. It reflects ‘self regulation’ issues as discussed in other threads.

your other option is to cancel your card or get the card number changed.

There have been reports that customers have tried that, and their helpful banks redirected the debits to the new cards so that is not always a magic bullet. Ah banks.

[peslis99]

Yes they said this to me also. You can cancel the card altogether and they could reissue a new one but that the direct debits would simply be transferred across! WTH!!! This is outrageous and needs to stop.

[Fred123]

I was meaning that the merchant advises the bank of the authorisation, but it would not surprise me that the banks might transfer the authorisation to a new card requested by the customer, even though they do not do so when one receives their new unrequested cards as has happened to us twice in 2 months.

As for the banks, there is plenty I would like to post about the but it would undoubtedly result in my being booted from this forum.

[phb]

Here are some more useful websites:

http://www.ndh.org.au/Debt-solutions/Cancel-direct-debits

https://www.fos.org.au/consumers/more-information-for-consumers/cancelling-direct-debit-authorities/

Direct debits - Moneysmart.gov.au

The FOS information may be useful to print out and attach to any correspondence to the bank and merchant requesting the cancelling of the direct debit.

Most bank websites also have information in relation to cancelling direct debits and what is required by that particular bank. For example:

How can I cancel a Direct Debit?

https://www.commbank.com.au/support/faqs/1236.html
https://help.anz.co.nz/app/answers/detail/a_id/23/~/cancel-a-direct-debit

Manage your transaction or savings account

The other thing to do is look at the bank issued credit card terms and conditions (also should be available on the relevant bank website) to see what it says specifically in relation to cancelling direct credit card debits with the particular card incurring the transactions.

[Fred123]

I read the 3 articles that you posted links to.
CBA clearly state that they cannot cancel recurring payments by a credit card or debit MasterCard.
Westpac state that they cannot cancel recurring payments.
ANZ NZ merely tell customers to contact the “initiator”.

[PhilT]

It looks like the silver bullet concept is that one has to ‘cancel the authority’ for ‘recurring payments’ put on a credit card, with a copy of that cancellation sent to the bank if the merchant does not timely comply, when it then becomes a disputed transaction…

It seems a play with semantics but even though they ‘cannot’ cancel the ‘recurring payments’ they can cancel the ‘authority to draw recurring payments’. My frosty legal mind thus concludes cancelling recurring payments (eg debits to credit cards) becomes a legal refusal to pay a bona fide debt, while cancelling the authority is not a refusal to pay and implies “regardless, I will pay my contractual obligations”.

Why this would be different between a debit card and credit card is beyond me but the pointers are that a debit card is essentially money and your account and you are the first person owner, whereby a credit card is an arms length intermediary whose issuer has agreed to advance you money for purchases, services, and payments, that you have agreed to repay to the issuer in some manner.

Is it / It is starting to make ‘lawyer sense’!

[someozi]

For future reference too if you ever have the option to do a recurring payment via Paypal instead of direct then do it. Recurring payments from Paypal give “you” the control. You simply go into Paypal & cancel/delete/revoke. I NOW always use PP if I can.

[betR2]

It is many years ago now, but I once complained at a bank that I had asked the always-trustworthy-gym-membership deduction be cancelled, in writing more than once as well as speaking to them several times and still the direct debit was taken, monthly. The teller said, “I can stop the payment at this end.” They did so instantly and I had no further problem. Maybe things have changed over time, but worth asking again if the business does not adhere to their responsibility to cancel when advised in writing. Don’t take no for an answer. Ask for further information from your bank on what you should do next, if they say they can’t help.

[peslis99]

Thanks everyone for your advice and info and links. It is all very helpful. I think I will closely monitor my credit card and ensure I never put a dd on a cc again!!!

[paul_of_the_forest]

There is also guidance on ASIC website here https://www.moneysmart.gov.au/managing-your-money/banking/direct-debits
However I was under the misapprehension that a bank could and would stop ALL forms of direct debits when requested to do so. Is this something you could look into Choice?

[peslis99]

Thanks for your response Paul. I will take a look at this.
I was hoping that Choice would look into this also as the control needs to be in the hands of customers not merchants and big business.

[grahroll]

They have indeed looked into it and probably are planning to do so again if not already looking at the problem as it has been mentioned in some topics on this forum in the past. To the 2017 Choice topic see:

Have you had trouble cancelling a direct debit?

Recurring payments can be a useful time-saving tool, but it can also be a real pain if you want to cancel a service and the bank or the merchant won’t play ball. You can get stuck chasing unwanted payments that are automatically withdrawn from your account. Our direct debits guide can help you navigate the pros and cons of automatic payments, and we’d also like to hear your stories about direct debits. Let us know if you’ve ever had trouble cancelling a recurring payment in the comments below. …

For some others on this forum that reference the DD problems:

Union membership rip off

If you find the direct debits recommece, try speaking to your bank about placing a block/stop on the direct debits on your bank account. While I am and have never been a union member, one gets the feeling like many other institutions, some unions are about themselves rather than those who they are alleged to support.

Union membership rip off

I phoned my bank (Commonwealth) to cancel the direct debit and they told me they couldn’t do it, I would have to organise it with the HWU. They said the only way I could stop the payments otherwise was to cancel my credit card and get another card! How ridiculous and inconvenient. What the Commonwealth bank told me is quite different to what it says in that ASIC link you posted.

Automatic Renewals

I personally don’t have a problem with automatic renewals but as a safeguard to be able to switch off any supply of goods or service when I determine so, is I never allow or set up direct debit for payment. I always pay renewals auto’s or otherwise by other means, as Direct Debit is much harder to stop even if you have cancelled a service automatic payments can still be removed from your account/s.

Norton Security Geo Rip-off

dannykane You were wise to purchase from an Australian store. I ordered and paid $99 for Norton via AMEX for a client approximately three years ago. Now I cannot stop the Direct Debits nor obtain a refund for those charges. Defender came free with Windows 10 pro, and seems to suit my purposes.

Optus, are my details safe?

I received a call last night from a company called 24/7 who claimed to be managing an NBN order I placed on line with Optus. The caller claimed to be from Optus and only when pushed hard did they admit they were 'working on their behalf. They wanted my identity details for ‘privacy reasons’. I declined. I asked for the address of their registered office. ‘It’s in Manila’ The address please. ‘It’s Manila. I can’t say more’ How did you get my number? ‘Because you placed an order with Optus’ …

Understanding your NBN needs

We put together this direct debits guide, but to my understanding the issues occur when either a bank or a merchant fail to follow the rules. We’ve heard a lot about underhanded tactics from gyms so your daughter is not alone there. Thanks for flagging this, I’ll do a shout out on another thread to see what else comes up.

Worrying scammer

Agree on PayPal. It just gets better all the time. There is now an option to pay by direct debit from your bank account as well as by card. I just don’t deal with companies who don’t offer PayPal

Is Energy Australia continually getting billing wrong or late?

Energy Australia have admitted that they cancelled our direct debit without informing us . Because of repeated billing errors from them, such as trying to bill us after 11 months, as well as being so far in credit due to their estimated payments required, we only check that we are still in credit. When we weren’t we contacted them, and were met with unhelpful and rude call centre staff that gave conflicting stories. When I requested the bill be wiped, the woman told me that she was only authori…

Banks keep taking loan repayments after the loan is paid off

A family member told me how their bank withdrew two extra fortnightly payments for a personal loan, after she had finished paying it off. Probably would have kept happening if she hadn’t noticed it and called the bank. Apparently the bank’s system freaks out when the last automatic withdrawal isn’t the exact amount still owing on the loan, and the onus is on the customer to cancel the direct debits. This also happened to my brother a few years ago. Has anyone else had this happen to them, or do…

[Choosegood]

yes its true. you cant do it. thats why i dont do direct debit unless its from someone i absolutely know i can trust

[grahroll]

There are very few absolutes in this life when it comes to trust. Perhaps the best we really can hope for in most cases is a high probability they will be trustworthy and the proof will only become evident when we need to question the processes and see the outcomes.

[margaret.conyers]

Tell the Bank you have lost your card (the dog ate it or whatever) they then have to cancel and give you another with a new number OK its a lie but it forces the issue in your favour OR change to Coles Mastercard. I found a strange charge on my card, rang them and they cancelled the card as it had been compromised If it is a trusted merchant (not fred from woopwoop) they might tell you to pay it till the transaction had been checked out and you would be refunded on the next month.

[mark_m]

That’s a proper response from MasterCard?

OR change to Coles Mastercard. I found a strange charge on my card, rang them and they cancelled the card as it had been compromised

Previously I’ve had similar service from Visa through the ANZ and American Express. Amex have been on the ball and picked up dodgy transactions on attempted authorisation, as has ANZ.

[PhilT]

Tell the Bank you have lost your card (the dog ate it or whatever) they then have to cancel and give you another with a new number OK its a lie but it forces the issue in your favour OR change to Coles Mastercard.

FWIW you just need to ask for a new card number because you believe it has been compromised. However you may have missed the salient issue. Even if you have a new card number issued by the same bank, the bank will connect ‘recurring payments’ to the new card.

A card account is not the same as a card number. A card account can have multiple card numbers assigned over its lifetime, hence why the ‘recurring payment’ follows the card number change.

However if you close a card account and open one at a different bank (new bank, new account, new card) you are correct that the recurring payment cannot follow as the authorisation is to a specific bank and account. However, in a worst case a merchant not getting his authorised recurring payment could turn over your account to a collection agent.

I found a strange charge on my card, rang them and they cancelled the card as it had been compromised

A disputed transaction (eg strange charge) is treated the same by all issuers, however with different levels of competence and customer service. The basic process is dictated by Visa, Mastercard, Amex, etc. A disputed transaction follows the script whereby

1. you usually are asked to pay whatever your current bill shows,
2. the bank gives temporary credit for the disputed charge while investigating,
3. if the merchant substantiates the charge to the bank’s satisfaction the charge is reinstated on your account, or
4. if the merchant cannot substantiate the charge your credit is made permanent and the amount is deducted from the merchants account (called a ‘charge back’),

sometimes ‘2’ and ‘3’ can be iterative prior to arriving at ‘4’.

To stop recurring payments the system requires you to

1. send the merchant a notice that the authority to debit recurring payments from your credit card account is revoked. Have proof you sent it and if possible that the merchant received it.
2. If they continue taking the recurring payments after receiving the revocation notice, send a copy of the revocation notice to the bank with a disputed charge claim. The bank will require the merchant prove they have authority, which they no longer have.

There are anecdotal stories of dodgy merchants playing the system for one billing cycle, but not two when the customer timely files the revocation notice.