Billed on a closed credit card – TIME and again
THE automatic renewal of contracts is particularly nasty practice, and one which has been outlawed in South Africa, thanks to the Consumer Protection Act, for more than six years.
Companies are compelled to contact the consumer in writing, before the fixed term expires, and inform them of their options in terms of renewal – and the financial imp l i c at i o n s .
In other words, no more sneaky auto-renewal clauses in contracts, thereby tricking consumers into buying into a product or service for longer than they intended.
And if the consumer doesn’t respond to the notification, the contract can only continue on a month-to-month basis, not for the full year or whatever the initial term was.
Sadly the publishers of TIME magazine, which no longer appear to have an office in South Africa, still have an auto renewal clause in their contract.
So subscribers commit to a certain number of months, and pay by credit card, but a clause in the Ts and Cs says something like: “We’ll continue your TIME subscription as long as you wish without interruption, unless you tell us to stop.”
Paolo Campanella only discovered that a R315 TIME gift subscription that he took out in 2015 had auto-renewed about six months later when he started receiving SMSs from Standard Bank about his outstanding credit card account.
Here’s the thing – he’d closed that credit card account in July 2015, but TIME magazine’s publishers still managed to debit another R315 to it.
“When I walked into their branch and closed all my accounts two years ago, I had an understanding that my relationship with them was over,” Campanella said.
“I’m incredulous that I could be billed on a closed credit card account.” And he’s not the only one.
He called TIME to cancel the subscription and settled the amount owing to Standard Bank.
But last month it happened again – TIME managed to debit Campanella’s closed credit card account for yet another annual subscription, and yet again he got threatening SMSs from Standard Bank about non-payment.
“I spoke to about eight people across three departments, all of whom basically said that I needed proof that I had cancelled the TIME subscription to make this problem go away, and I don’t have such proof, because it was cancelled via a phone call.”
He was later told that the bank was unable to stop debit orders which had been authorised by the account holder, even though the account was closed.
So I asked Standard Bank: “What does a person have to do to ensure that a cancelled card can’t be billed?”
Responding, spokesman Ros Lindstrom said recurring credit card payments created a situation where such a payment could be debited onto a potentially closed account “as displayed in Mr Campanella’s case”.
If such a debit is made to a closed account, he said, it should be “charged back” to the acquiring bank.
“But this process is not consistently followed, and that created the service break down as described.
“Standard Bank erred in that we did not perform a chargeback with the merchant, and we failed to inform our customer that there was still a debit order running on the account.
“For the distress and concern that this has caused, Standard Bank would like to apologise. We will be in touch with the customer to rectify this situation and apologise in person.”
Coincidentally, I received a very similar complaint from Shonisani Makhari of Lonehill – a former ABSA Private Bank client. But he contends that he never authorised a TIME magazine subscription in the first place.
Despite this, debit orders for subscriptions to the magazine started appearing on his credit card account about three years ago.
He informed the bank, but they continued, he says.
“They would tell me the matter had been logged with the fraud division and then I would not hear anything from them.”
Totally frustrated, last year he settled and then cancelled his ABSA credit card, thinking that would be the end of the TIME problem.
But at the end of last month he received a statement from ABSA showing that an amount of R529 had been debited to that closed account.
“To me this is a clear indication that there is a serious systems inadequacy that allows this to happen,” he told In Your Corner.
Head of ABSA’s Private Bank segment, Riaan Petersen, said the bank had investigated “and resolved” the unauthorised debits on Makhari’s account, and ensured that his credit record had not been negatively affected.
“We urge customers to regularly monitor their accounts and notify the bank as soon as they see any unauthorised debits,” he said.
So the take-outs of this tale are:
● Be very wary of taking out credit card subscriptions with overseas-based companies with non-CPA auto-renewal subscriptions;
● It is possible for a charge to made to a closed credit card account – banks can’t be relied on to charge it back to the “acquiring” bank.
Wendy Knowler will be on leave for two weeks, and there will be no In Your Corner column on Monday August 14 or August 21.