The Problem with Automatic Bill Paying


Automatic payments are great – until you want to cancel the service.

By Gary Foreman

 

There is a flip side to the convenience offered by automatic bill payments: Sometimes it can be difficult to stop those same automatic payments. Despite how you might feel if you are caught in this trap, you are not doomed to pay forever once you have closed the credit account which you used to make automatic payments.

The Pros of Automatic Bill Paying
It's easy to see why automatic bill paying is popular. For the consumer it is extremely convenient. No need to write and mail checks each month. As long as you have enough money in the account there's no chance of triggering a late fee. The Electronic Payments Association estimates that consumers save billions by using direct payments.

The companies whose bills are being paid automatically love it, too. They spend less when they don't have to sort, post, and process checks. They're more likely to be paid on time. Also, the customer is more likely to continue paying for the service even if he doesn't use it (no check writing to remind him he's wasting money).

And the Cons….
Like all great systems, automated bill paying is terrific until it goes wrong. And sometimes it seems as if the selling company (credit card company) wants it to go wrong. The longer they can pretend not to know that the customer wants the service stopped, the longer they can charge for it. Some companies are notorious for making it difficult to cancel automatically billed products and services. In some cases, their phones always seem busy.

Credit card companies are not responsible for notifying companies that you want a service/billing stopped. In fact, you can pretty much expect that they will process any bills that are legally presented to them. And even if you have closed the credit card account or have stopped using the card, you will be responsible for the charges.

How to Stop Payments
The Fair Credit Billing Act provides some protection. You need to notify the billing companies in writing that you want the service/billing to be stopped. Be sure to include sufficient information in the letter: account number, how much is being charged, how often, and for what goods or services. State clearly that you want it stopped immediately.

Send the letter via certified mail and request a return receipt so that you have proof it was received. Address the letter appropriately. Check your statement from the billing company for a heading such as "in case of error" or "send inquiries to…." If a statement is not available (and it might not be if you have been paying automatically for awhile), search for the company’s web site and find a “contact us” page that will have its mailing address.

At the same time, send a second letter to the credit card company. It, too, should be sent certified mail with a return receipt requested. Say that you have contacted the billing company in writing and ordered them to stop billing your credit card. Include the company name, the amount being charged, and the product/service that has been cancelled. Keep copies of both letters and return receipts.

If All Else Fails
The letters should take care of the problem but if not, the next step is to contact your state’s attorney general’s office. You can find the listing at www.creditinfocenter.com/repair/stateag.shtml. Send the office a letter explaining what has been done and include copies of earlier letters to the billing and credit card companies.

The final recourse is the Federal Trade Commission (FTC). For information on consumer issues call 1-877-FTC-HELP or go to www.ftc.gov, click on the “for consumers” button, and fill out the complaint form.

As to closing the credit card account in the first place, you should be able to do so anytime. This, too, should be done via return-receipt mail. And you need to recognize that even if you close the account, you still are responsible for any balance remaining on it.


Gary Foreman is a former purchasing manager who currently edits The Dollar Stretcher website www.stretcher.com and newsletters