Direct debits and recurring payments – avoiding frustration and overcharging
Ending repeat payments
It is almost impossible to avoid the use of direct debits when dealing with ongoing business relationships. But they can be a source of frustration if you have trouble stopping the direct debit when the business relationship ends.
You can ask your bank to provide you with a list of your direct debits and recurring payments and they will provide you with the information for the previous 13 months. The list will include all the information that bank knows from information you have provided.
Payments from your deposit account are called “direct debits” and the payments from your credit card account are called “recurring payments”.
Banking Code of Practice
If you have given a third party an authority to debit your account, that authority may be cancelled either by notice to the third party and/or by notice to the bank. This is confirmed in the New Code of Banking Practice, which says that a bank will promptly process your instruction to cancel a direct debit request and will not direct or suggest that you should first raise your request directly with the third party. The bank may suggest that you also contact the merchant and this is a good idea to be sure the authority is cancelled.
You should first check your agreement to see whether cancelling the direct debit authority may breach your contract with the merchant and seek professional advice if you are not sure. Further, be aware that cancelling the direct debit or recurring payment may not relieve you of your obligations under your agreement with the merchant.
Steps to take
If you cancel your credit card recurring payment authority, take these steps:
- Write to your bank and to the merchant cancelling your authority to debit your credit card account. Do not simply rely on clicking a “cancel” button on the merchant’s internet site as you may not receive confirmation you have done this.
- When you receive your next credit card statement, check it carefully. If the transaction has been debited to your account, contact your bank straight away and dispute the transaction. As credit cards have time limits on processing charge backs, you should not delay.
- The bank will then start the charge back process if it is available to you
- Remember to check later statements as well and dispute further transactions if they continue to appear.
A copy of the Current Banking Code of Practice may be accessed by clicking here.
A copy of the New Banking Code of Practice which comes in effect 1 July 2019 may be accessed by clicking here.
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Please note that the information in this article written by Margaret Miller partner of Bell Legal Group is general in nature. It is not legal advice nor should it be relied upon as such.