Here's what to do if retailers keep billing you even after you cancel your subscription
Convenience is the driving force behind many aspects of modern life. Don't want to go grocery shopping? Grocery home delivery services such as Instacart can take care of that for you. Want a certain book that is out of stock at the local bookstore? A Google search will pull up any number of online booksellers who can find and ship it to you. Don't want the hassle of keeping up with which bills are due when? Automatic bank drafts mean you don't have to.
But what happens when you cancel a service that has been billing you automatically and you keep getting charged? There are several steps to follow.
Know the Laws
There are laws governing both ends of recurring transactions, i.e. the retailers charging the consumer and the banks processing the charges.
The Restore Online Shoppers' Confidence Act (ROSCA) governs retailers who engage in "negative-option marketing," i.e. the practice of automatically billing a consumer for the next shipment of their product unless the consumer opts out within a certain period of time. These retailers are required to do several things:
- They must "clearly and conspicuously" tell the consumer about all of the terms and conditions that apply to the transaction before they obtain the consumer's billing information.
- They must obtain the consumer's "express informed consent" before actually charging them.
- They must provide "simple mechanisms for a consumer to stop recurring charges."
Retailers who do not follow these requirements are subject to action from the Federal Trade Commission (FTC), including penalties.
There are, of course, other "non-negative-option" retailers whom consumers might pay on a recurring basis, e.g. magazine and newspaper subscriptions or donations to a nonprofit or a political organization. These transactions are also governed by law, in this case by Regulation E. This regulation limits the consumer's liability when he or she has not authorized an electronic financial transfer. It also provides recourse for the consumer when the law is violated.
How to Cancel
Normally it is not difficult to cancel a recurring donation, membership, or subscription. Here is how to do it:
- Cancel in the Same Format as You Signed Up
- Make Sure You Canceled the Contract, Not Just the Payments
- Write to the Retailer and the Bank
- Call and Inform
- Dispute the Charge
- File a Complaint with Regulatory Agencies
Consumers who signed up online should cancel online. Those who did so by phone should cancel by phone. If it doesn't work, gather all of the records pertaining to transactions with that retailer and try again.
If you do succeed in cancelling but continue to be billed, or if you cannot reach anyone to process your cancellation, don't give up. See the following steps.
Cancelling payments to a retailer does not automatically cancel the relationship—i.e. the contract—you made with it. The Consumer Financial Protection Bureau (CFPB) puts it like this:
"[C]ancelling 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."
When you cancel, make sure that you have ended both the payments and the contract or service.
Consumers have the right to cancel even when the other parties make it difficult to do so. Your next step should be to write to both the retailer and your bank and revoke their authorization to charge you. Check the CFPB's website for sample letters to get started.
If the charges still continue, call both the retailer and the bank and inform them that you are revoking their authorization to charge you. Firmness may need to take precedence over politeness here. Write down the name of the person you speak to and when you spoke to them; this information will be necessary for following up.
If you are still charged after you have revoked the authorization of both parties and have informed them so, the next step is to dispute the charge. The length of time the dispute will take will depend on whether the charges are being made to a credit card or a bank account.
Banks require consumers to dispute charges within 60 days. They will then have approximately 10 days to investigate the matter and then three more days to inform you of their findings. The problem must be resolved within 45 days from when you dispute the charge.
Consumers also have 60 days to dispute a credit card charge. However, the bank that issued the card then has 30 days in which to acknowledge that it has received the complaint, then two billing cycles to resolve it. It must take no more than 90 days.
If you have tried all of the above and are still being charged, you still have further recourse.
Consumerist explains that "[r]egulatory agencies are here to help you if the companies you work with are behaving unlawfully and taking your money when they shouldn't be." When disputing billing, you can file a complaint with the CFPB either online or by phone, and you can file a complaint online or by phone with the FTC if the organization that is billing you is acting in a misleading or deceptive manner.