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March 5, 2012

“If Your Credit Card Expires, We’ll Charge it Anyway”

Filed under: Finance,Internet,Retail — Edgar (aka MrConsumer) @ 5:05 am

et bookTo entice people to sign up for an annual subscription to their Entertainment coupon books, the company recently offered an enticement: pay just $10.50 for the 2012 book (and agree to buy the 2013 book, and those printed in subsequent years, for $5 off when they become available).

Like a book club, they say they will give you advance notice before the new book is shipped and give you an opportunity to cancel. That’s fair and reasonable.

To prevent some clever consumer from just cancelling the future editions in order to snag a bargain on this year’s book, they buried in the fine print, this bit of protection for themselves:

*MOUSE PRINT:

6. If you cancel prior to receiving your first book through the Annual Renewal program (2013 Edition) your credit card will be charged a $5 cancellation fee.

That also seems fair, and the consumer is still getting a bargain price on the 2012 book.

What seems to cross the line, however, is this:

*MOUSE PRINT:

5. If your Credit Card reaches its expiration date, your failure to cancel after receipt of our notification will constitute your authorization for us to continue billing your card.

What? They are going to send you the book, knowing that your credit card has expired, and deem this fine print provision to be your authorization to engage in this questionable practice?

Somehow, I don’t think that Visa and MasterCard would look kindly on a company that deliberately puts charges on a card it knows is no longer valid.

• • •

10 Comments

  1. It is cheaper to go through the deals they offer during December or right after Christmas. PLUS go through cashback sites for additional savings. More info on cashback sites.

    Comment by Nancy-The Frugal Dietitian — March 5, 2012 @ 8:12 am
  2. I had the same problem with Scholastic books online. after getting some books for my grandson they kept sending books and charging my card. I tried for 3 months to stop them, I returned books (at my own cost) and emailed them, and called them. Finally got the credit card company involved and they put an end to it.

    Comment by Myra — March 5, 2012 @ 9:09 am
  3. Readers may be shocked to learn that a company actually did this to me. It was for the electronic subscription to their magazine. My credit card expired in January. My subscription was going to be renewed in February. I did not cancel the subscription, assuming that they could not charge an expired credit card. I did not want another year of this subscription, but guess what? The charge went through anyway. So I ended up with another year of Consumerreports.org. IMAGINE THAT! CONSUMER REPORTS did this to me.

    Comment by Tim Bair — March 5, 2012 @ 9:49 am
  4. I don’t think this is as nefarious as it might appear. Plenty of credit cards get extended by three years every three years, and plenty of people forget to notify every single biller of their new expiration date. It’s not uncommon to go ahead and run expired cards anyway. It’s not an attempt to commit fraud. It’s just reasoning that most likely, the card is still valid. And if it isn’t, the charge won’t go through anyhow.

    Comment by Kyralessa — March 5, 2012 @ 9:50 am
  5. I guess the expiration date on a credit card means nothing!

    Comment by Peter — March 5, 2012 @ 11:41 am
  6. I used to work for a hotel chain that if the customer gave us an expired card (happens really often with business travelers), we would just manually adjust the year and rerun it. (after verifying identity). 99% of the time it would still go through.

    Comment by Amber — March 5, 2012 @ 11:58 am
  7. I got one good one. I had a TD visa card years back and long story short, I cancelled it, cut it up etc. (balance was paid). Over a year later, I got an TD visa bill from them with a charge on it for a TD service plan that I “apparently” did not cancel when I cancelled the card. When I call, I was told I would have to pay it and they just re-activated the card so they could put their charge through. It took a bit of fighting over the phone but once I accused them of fraud, they quickly cancelled the charge as well as the card. Anyone have a similar experience with a cancelled card (not just expired)?

    Comment by Chris — March 6, 2012 @ 7:10 am
  8. I work for a credit card gateway, and Kyralessa is the closest to correct here. some point of sale systems won’t allow a transaction to even be posted to an expired card.

    However, if it does allow it, then ultimately, how it is handled is at the discretion of the bank that issued the card. Some banks would respond with a decline, and I imagine others would authorize the transaction.

    However, if the cardholder calls the back and tells them they did not authorize the charge(s), the issuing back will initiate the charge

    Comment by Maalvi — March 9, 2012 @ 6:38 pm
  9. …the chargeback process, and this type of merchant will have an almost impossible time defending the transaction. The card associations and merchant banks charge high fees to merchants who take this sort of risk, so instead of being unhappy with them, they just line their pockets…

    Comment by Maalvi — March 9, 2012 @ 6:41 pm
  10. I signed up for a free month trial of Netflix. I forgot to cancel & was charged for the next month. When I went to cancel, their system only allows an immediate cancellation without credit for unused days. Since it was at the beginning of the next 30 days and my Visa card expired that month, I didn’t cancel thinking I might try Netflix within the period paid for already. Netflix continued to charge my expired Visa and my credit card company said the user agreement with Netflix allows them to continue to charge my card even though I did not update the expiration date. I think Netflix’s policies are legal theft. I also found out the ‘local’ bank I got my credit card through had completely outsourced everything except their name on the envelope.

    Comment by Cara — March 19, 2012 @ 10:01 am

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