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My Evil Undead Credit Card

181 points by ryangilbert 14y ago

jrockway 14y ago
Doesn't everyone know this? You can't enter into a contract with someone and then just pull the payment instrument out from under them. Even if they stopped charging your credit card, they could still sue you for the amount you owe them. You have to cancel your gym membership if you don't want it anymore. Send them a registered letter and CC the state's Attorney General office if they won't cancel the account for you. Edit: Wow, I just realized this is Arrington's blog. Isn't he a lawyer? How can he not know this stuff?
- dangrossman 14y ago
  "Sending a registered letter" sounds like a "getting ready to sue" legal last resort. You don't have to do things like that to cancel subscriptions with most any other business. Unfortunately that's actually the only way to cancel membership in writing at most major gym chains in the US. They all outsource membership billing to the same company, ABC Financial. ABC has their customers (the gyms) require member cancellations be sent by certified mail. Any cancellation request by phone or mail that isn't sent certified is simply thrown out. If you cancel your credit card, they'll just send you immediately to their collections agency. This is how they guarantee "more revenue from more members than with anyone else". It's such a scummy business. http://www.abcfinancial.com/ http://www.abcfinancial.com/ A Google search for "ABC Financial scam" (in quotes, exact phrase) has over 13,000 results.
  - cstejerean 14y ago
    I've yet to see a gym actually go to collecrions. They'll send angry letters threatening things for a few months, and then give up. Don't ask how I know this :)
    - eli 14y ago
      Might want to check your local rules on stale debt before you pop the champagne. They typically have a couple of years. Once they figure out that you aren't going to pay with out a fight, they'd be nuts not to sell your debt -- something is better than nothing.
      - raverbashing 14y ago
        Well, they will sell your debt for, I dunno, 20%? Maybe more, maybe less The buyer will make more angry letters, maybe signed by an attorney, try to negotiate, etc and then maybe go to court
        eli 14y ago
        You skipped "ruin your credit"
    - encoderer 14y ago
      Maybe you haven't, but it happens all the time. Years ago when I was cleaning-up some credit mess I made when I was still in school I spent a lot of time learning on Creditboards.com and that was a very common collection people would seek help with. Creditboards is a fantastic resource and I cleaned up several small (and one large) collection item from my reports far earlier than the 7.5 years the FCRA lets negative info stay on a report.
  - ghshephard 14y ago
    I've had five gym memberships in my life. Every one of them allowed me to cancel the membership by coming into the gym and canceling it. In every case, that method, "Come into the gym and cancel" was written write on the contract. If you are willing to negotiate with the owner/manager, they might even allow you to pay the full year up front - because that's basically the same thing (this was my argument) as signing up for a 1 year membership, and then canceling it the very same day - you are still responsible for the full 12 months, but it would end after one year because you had "cancelled" it. Can you name a gym that won't let you cancel your membership by coming into the gym and doing so?
    - dangrossman 14y ago
      Ballys Fitness, Blast Fitness, Anytime Fitness and Gold's Gym according to just a few of the 90 reports on RipoffReport. I didn't just pull names out of titles, I read the reports and these are people that said they went to their gym to cancel, but kept getting billed by ABC. http://www.ripoffreport.com/directory/ABC-financial.aspx http://www.ripoffreport.com/directory/ABC-financial.aspx
      - ghshephard 14y ago
        I didn't read all of them, but the first, "Golds" caught my attention: == SNIP == "I am currently on the phone (and have been for an hour) with ABC Financial, the company that handles billing for Large Gym chains Golds Gym, Lifequest Fitness (I'm sure there are others). I've been trying to cancel my membership. I've been put on hold 4 times." == SNIP == I've never had a gym membership that, by default, could be canceled via letter/fax/phone call. They all say the same thing, "Come in to the gym in person, and cancel the membership." Most of them also have a clause saying that you are renewed for a year if you don't cancel on your anniversary. I always add a half dozen riders (and have the manager sign it) that says things like "If I get a job or move more than 25 miles away from the gym, I can send in a letter stating that, and cancel via registered mail." - Gym managers are usually reasonable, and will let you do that. Take 15 to 20 minutes to negotiate your Gym contract - you do realize it's a contract, right? In 90% of these cases, people just aren't demonstrating personal responsibility for the contracts they've entered. I'll say it again - never, ever, ever enter a recurring contract (or something that might _be_ a recurring contract) with your credit card, unless you have 100% control over the cancelation and terms.
  - jrockway 14y ago
    Yes, this is shady. That's why you involve the Attorney General.
  - rdl 14y ago
    For gyms, you can go to Costco and buy a 2-year 24 Hour Fitness all-Sports club membership for $320, prepaid, too.
    - raverbashing 14y ago
      This is very good value (well, it's probably because most people will go 1 month and then quit)
- mootothemax 14y ago
  You can't enter into a contract with someone and then just pull the payment instrument out from under them. Isn't that a different argument though? I had my wallet stolen at the end of February and would be outraged if charges from any of those cards suddenly went through my bank account. I agree that one shouldn't just walk away from one's commitments, but isn't that what the small claims courts are, in theory at least, meant to enforce?
- thaumaturgy 14y ago
  I disagree strongly with this. Merchants can (and often do) change the terms of monthly payments, ignore legitimate requests for account cancellations, or even incur monthly charges for things that the cardholder was led to believe was a one-time charge. Cancelling the card has been the cardholder's tactical weapon against that nonsense. It's still a hassle for the cardholder, so I'm left wondering how much of an actual problem it is that people are canceling entire credit card accounts just to wiggle out of a contract. And, in the case that people do that, the merchants have recourse through either collections or court. If enough such charges go to collections, the cardholder loses the ability to open new accounts. If people are no longer able to cancel their credit cards as an item of last resort, then the merchants are left with all the leverage. Arrington's natural response to that -- as I suspect will be most other peoples' -- will be to stop using their credit card. I don't think we want that to happen.
  - jrockway 14y ago
    Merchants can (and often do) change the terms of monthly payments, ignore legitimate requests for account cancellations, or even incur monthly charges for things that the cardholder was led to believe was a one-time charge. That's what the dispute process is for. Sign an affidavit saying the merchant violated their contract with you, and the charge goes away.
    - thaumaturgy 14y ago
      I have absolutely no reason to trust credit companies as the unbiased vanguard of consumer protection. Signing an affidavit merely begins a process where the charge might go away, and I would expect that the process will get slower while ending up in the customer's favor less often.
      - aneth4 14y ago
        Except that consumers almost always win such disputes and they are really not very burdensome. So bitching about this process is really just bitching.
      - 14y ago
- eli 14y ago
  I think you misunderstood him. It's just as likely that the gym is trying to screw the customer by ignoring a valid request to cancel (even one sent via certified mail) than a customer trying to welch on a contract.
  - jrockway 14y ago
    I'm sure the gym is trying to screw him. They make money when you don't show up, not when you do. That's why you read the contract before signing it, and negotiate it to something less shady. Or take your business elsewhere. Like I said in another reply, you mail the Attorney General's office so that if there's a pattern of screwing customers, the state can take appropriate action.
    - eli 14y ago
      I don't follow your point. If I'm getting screwed shouldn't I be able to prevent them from automatically billing me (in addition to mailing my attorney general, which seems does not seem likely to resolve the situation in the short-term)? Why can't I cancel a recurring billing relationship just like I can cancel a check?
- bandushrew 14y ago
  I absolutely should be able to deny them access to my credit card, unless the courts specify otherwise. WTH is the bank doiing, enforcing the terms of a contract I have with a third party? since when is that the job of the bank? Yes, the third party can sue me. Thats fine, but I must be able to maintain control over my own bank account.
  - learc83 14y ago
    I'm willing to be that somewhere in your cardholder agreement you give the bank the right to pay recurring charges on your behalf--as if you gave them the ability to act as your agent. An ability that apparently according to recent legislation you can't rescind merely by cancelling your card.
ams6110 14y ago
To play devil's advocate, you should not be able to just close your credit card account and be able to walk away from a contractual recurring payment agreement into which you entered.
- jrockway 14y ago
  Indeed. Though I'm sure the gym's merchant account requires them to stop charging a particular credit card if you ask them. You can then switch to paying by cash, stop paying, default on the account, and then go through the whole collections thing. The OP did learn a valuable lesson, though: don't enter into a contract you don't agree to, expecting to have someone else get you out of it.
- gmrple 14y ago
  But is it the bank's responsibility to enforce the contract? I would rather have a civil court be the recourse for a broken contract than for a third non-governmental party to handle it. I suppose if it was written into the contract that the bank would perform this role prior to the card being obtained and this being made abundantly clear to both sides things would be a little different. Still, ideally I would have the bank as the holder and mover of funds at the will of the cardholder, not someone outside of the contract between the bank and cardholder.
  - euroclydon 14y ago
    Oops, meant to upvote you. I agree. I guess when you agree to use credit cards you're not just using a payment instrument the bank has made for your convenience, but choosing to use a system which the banks find lucrative and the merchant exert a good deal of control over. Consumers are not as politically proactive as merchants so we can't be surprised to find the laws favor the merchants. [edit] Someone upstream mentioned authorizations. I'd like to know more about how authorizations work with subscriptions. Do they keep a rolling six month queue of auths or is there a seperate and unique structure for recurring payments?
    - chimeracoder 14y ago
zampano 14y ago
Why not just call the gym in question? I've had numerous accounts with recurring charges, but I've never dealt with them by changing account or card numbers.
- redslazer 14y ago
  Have you ever attempted to cancel a Gym membership? It is near impossible.
  - adient 14y ago
    Why? I've had to switch between a few different gym companies over the years and never had any trouble.
ben1040 14y ago
Back in 2000 my wallet, including my Visa check card and other credit cards, was stolen in Paris. I called the bank right away, got cards canceled, had new ones ordered and all that. I get my checking account statement and see several charges that the thief made before I was able to get the card canceled. My bank cheerfully reversed those and I thought nothing of it. Four months later, I see a charge on my statement from one of the same merchants as before. I called my bank, and they said that the merchant had authorized my card, but did not proceed to capture the payment until then. I asked why this happened on a canceled card, and was told the authorization happened before the card was reported stolen so they had to honor it. They told me the merchant had six months to capture the payment, and it basically was as if I had written them a check and they sat on it for months. Clearly the thief had some buddy with a merchant account, and they were trying to see if they could sneak a charge in later without me noticing it. I asked my bank if there was a way for them to see if there were more of these charges in the pipeline, because I had written some checks and it would be highly inconvenient to me if they bounced. They said they had no way of knowing. The only way to stop these from going through was to close the checking account, which would also mean the checks I've written were going to bounce anyway. So I just had to wait out two more months and hope nothing more happened. Luckily, that was the only instance.
- encoderer 14y ago
  One of the several reasons Debit cards are much worse and anti-consumer than Credit cards. People think that because it has a Visa logo and their bank has a limited fraud liability policy that they're safe. That their debit cards have the same consumer protections as credit cards. That's just not the case. Moreover, if you swipe-and-sign for anything you should be getting rewards or cash-back. Very few debit cards offer rewards, and the ones that do are often less lucrative than those offered on credit cards.
  - soult 14y ago
    I don't know how debit cards work in the US, but I need a PIN to use my debit card, so short of being forced to withdraw money at gunpoint, you won't get any access to my bank account.
phn 14y ago
I don't know where this is from. But in Portugal, I really feel blessed by the MBNet service that exists here. Basically you tie it to any card (credit/debit) and generate temporary credit card numbers with a hard value limit defined at the time of creation. Want to buy a 10$ game, generate a card with a slightly larger value and pay with it. If the merchant tries to take more, it is denied and the card automatically cancelled. I am amazed this doesn't exist elsewhere (if it does I have never heard of it). Even banks themselves could provide something like this. EDIT: I don't know how it actually works if you want to pay by credit. I generally generate cards with values that my bank account can cover.
- vasco 14y ago
  Just to add something regarding MBNet, it is also now possible to create a virtual credit card for multiple transactions, I believe up to a year. But it will never go over whatever limit you set at the beginning. It's a great payment method indeed.
- X-Istence 14y ago
  Bank of America, my credit card provider provides the same sort of service. They call it ShopSafe. You generate a temporary credit card number with a certain limit and you can set when it expires. It is fantastic for purchasing goods from web sites that may not secure their card data completely, or if you are worried about fraud on the internet. I've also in the past generated the numbers for when I need to pay over the phone and don't want to hand out my credit card number! Extremely handy, unfortunately it seems that not enough people make use of it, to the point that BoA employees in the fraud department are at times not even aware that the feature exists...
  - chimeracoder 14y ago
    Are there fees attached to this? I'd be interested in using this, but I get so frustrated with Bank of America's fees. They want to charge $10/month just for using OFX to access your own financial transactions! Given the level of security that most banks implement, this is completely indefensible in my books (given that the same information is available through the shoddy web interface).
bencoder 14y ago
Had a friend who cancelled an old mobile phone contract. He kept the old phone and sim in a drawer somewhere. House got broken into and the old phone was stolen but my friend didn't notice the missing phone since it wasn't used anymore. Thief managed to call up the phone company and get the contract re-instated. Friend received bills for thousands. Cut up your old sim cards.
ericb 14y ago
I closed an account, and moved. Had this happen, go to collections, damage my credit, and had no idea.
efa 14y ago
I noticed this a few months back. I had cancelled an Amex card and get a new one (brand new number). My old one was saved in my Amazon profile. I charged to that old account a couple times before I realized that that was the card I cancelled. But it worked fine. To this day I can still pick that card when checking out of Amazon with no issue.
ghshephard 14y ago
This makes sense somewhat - if you could get out of a contract with a merchant, simply by canceling your credit card, then why bother to uphold your obligations (multiple payments, length of relationship) etc... Just get whatever benefits you want, then cancel the card and wave goodbye to the merchant. That would be _particularly_ problematic on a multiple-payment scenario. The net-net is _never_ give your credit card to anyone who suggests they will charge you, unless you have full control over that relationship. It's the key reason why I subscribe to all my magazines and newspapers (key exception being the WSJ) through iTunes - single place to control subscriptions - with the added bonus that I get reminded every month that there will be a renewal coming up. I also negotiated with my Gym to allow me to pay the full year up front + initiation fee to avoid having to give them my credit card - It was amazing how difficult it was for me to convince them to allow me to give them $410 up front for a $30/month gym membership. They really make a lot of money off of people who don't want to come into the gym and cancel, or forget to do so on their "Annual" anniversary when they get signed up for another year. Most of us are in our early 20s when we discover the downsides of recurring credit card charges - I'm surprised that someone as savvy as Arrington is discovering that he can't just cancel his account to end those recurring charges - I thought it was something that students usually do and discover doesn't work. I certainly did when I was a student.
- dclowd9901 14y ago
  No, if you have purchases on your agreement prior to cancellation, it's obvious that you are beholden to these purchases. These are within contractual guidelines and sensible. If a merchant tries to charge my card, and finds that they cannot, they can end their relationship with me, and if, for some reason, cannot reconcile outstanding costs through traditional means, can utilize collections agencies or any other means they wish to obtain their due. This is not only nonsensical, but legally questionable at best, and I'm very surprised this is the first I've seen anyone bring a point against it.
  - ghshephard 14y ago
    My gym offers a membership - $30/month with credit card and a one year term, no initiation fee, or $50/month, $75 initiation fee on a month-by-month basis. When I sign up for the one year membership, I put my signature on a contract, indicating that I will oblige by all the conditions. Should I be allowed to sign up for the one year term, and then cancel my credit card after a couple months? Whenever you enter a contract, there are conditions that must be fulfilled to cancel that contract. Simply saying "I didn't read those conditions" or "I don't want the product anymore" is not a sufficient condition to terminate the contract. And thinking that you can get out of it by "canceling the credit card" is naive in my opinion.
deleted 14y ago
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GuiA 14y ago
Use a debit card (and tick the box that prevents your account from being overdraft when you don't have enough funds if it's not there by default). If there's no money on the card, transactions will go through.
aneth4 14y ago
Is anyone surprised that Michael Arrington has soured relations with a vendor enough that they'd refuse to talk to him? Not I. The dispute resolution process deals with these sorts of things and punishes merchants who repeatedly violate rules. Strategy number one is to not be a dick. People respond better that way and you won't end up in the situations Michael Arrington always seems to end up in. I probably deal with as many merchants and as much travel as him and have always resolved such issues amicably.
rdl 14y ago
My solution to this is to use an American Express card. Every single time I've had a problem, domestic or international, they've been on my side, and disputes are easy to handle. (the correct Amex cards to have are Starwood Preferred Guest for USA use and Platinum for international or status (lounge access, etc.) use.)
- learc83 14y ago
  Interestingly the one time I had a chargeback dispute with an Amex customer--even though I won the dispute (I had clear evidence--video, signatures etc...)--Amex still credited both my account and the customer's for the full amount.
  - rdl 14y ago
    Amex is the Apple of the payment world -- they control and brand the whole thing end to end, and own the high end, charging a slight premium for some things when the market will bear it (and were both far larger premiums and lower volumes in the past). With Visa/MC, it's a card association (until recently, a non-profit), and an issuing bank. The issuing bank may have a bunch of banking relationships with you (so you're unlikely to walk over a credit card), or only a credit card (so you're not that valuable to them anyway), and doesn't have as much incentive to protect the card association brand. End user consumers almost never contact the card association itself.
- khyryk 14y ago
  What do you mean by "the correct Amex cards to have"?
  - rdl 14y ago
    Maximum value of rewards points and other benefits vs. annual fees. Centurion (Black) is pretty much the same as Platinum, with a 6x higher fee. It used to be a lot cheaper than it is now AND have more benefits, but it's been substantially devalued. Platinum does provide a lot of perks just for having one (lounge access, etc.) worth about $500+/yr, as long as you travel. It also has no international fee. SPG gives effectively 5% return if you use it aggressively. The problem is a high international fee.
charlieok 14y ago
The basic affordances underlying credit cards are backward: “Here's my wallet -- go ahead and take what you think you need.” Carrying a computer (i.e. phone) running a user agent can vastly improve the interaction. Something like: 1. Transmit an identifier from user agent to merchant via radio, barcode, or some other method. 2. Merchant's system asks user agent (either directly or through a service such as the user's bank) for a dollar amount. 3. User agent asks the user: "do you accept this charge? yes/no" At no point is the merchant given a piece of information that allows them to charge whatever amount they want. The transaction isn't complete before the user approves the amount on their own device. It's kind of amazing we haven't switched to something along these lines already.
- Evbn 14y ago
  Every month, your card company sends you a list of charges. If any of them are illegitimate, you tell the company, and don't pay, and they investigate. That's basically the same as your proposal. Your credit card number is like a public key, if you will. Checks are worse. They pay out immediately without asking for approval.
  - charlieok 14y ago
    No, it isn't the same. I don't want to wait until the end of the month. The information about this transaction is freshest in my mind at the exact hour and minute I enter into it. I want a notification on my phone immediately: "(Merchant X) requests a payment of ($Y). Do you accept this charge? ( ) yes ( ) no [ ] Auto-apply this answer to future requests from this merchant" The notion that I shoudn't, by default, have a role in approving each and every transaction before it goes through is a holdover from the days when I didn't have an always-connected computer in my pocket. If I never approve it in the first place, there's no wrong that needs to be righted, no fraud that needs to be investigated. I just got some spam asking for money. I marked it as spam to keep from being flooded in the future by the same spammer, and that's it.
- olefoo 14y ago
  I can already hear someone asking "Is it PCI Compliant?". Unfortunately payment technology, and monetary exchange in general is so valuable that frozen accidents stay because implementing something better would be detrimental to an incumbent's revenue stream. Bitcoin :P
cletus 14y ago
It is interesting that charges can be put through after a card is cancelled. I, for one, did not know that. I've cancelled cards previously because merchants were unreasonable or unresponsive. Gyms are one of the worst for this. Cancelling a gym membership is an exercise in torture. Anecdote: I was in an Equinox gym a couple of months ago, thinking about joining. I saw a "representative" who was happy to give a tour through the gym and explain the costs and benefits. For these sorts of things however I give a fake phone number because I loathe the follow-up calls from such places. Anyway, at one point while standing around reception where there were 5 or so such representatives standing around the receptionist answered the phone. Someone was inquiring about closing their account. She said they had to speak to a specialist and none were available. What the...? No one else seemed to be with a customer. It just struck me as another tactic to make it more difficult to cancel. Now for me this would be relatively easy. My company has a corporate membership so it can be deducted directly from payroll and when I say for it to stop, it stops. But honestly I can't condone these hard sell tactics by giving such companies my money. Cancelling a gym membership should be as simple as a 2 minute phone call or (better yet) clicking a button on a Website (Equinox has a Website where you can reserve exercise bikes no less). My only experience with dispute resolution was reasonably painful although not as bad as it could be. I ordered something online and the merchant called me to say that price was only when I bought it as part of a package. I said I didn't want it. He said fine. A week later it turned up anyway. I had the charge reversed. They applied it again. I had it reversed (again). I had to send the item back by registered post. I think the lesson to take from gym memberships and similar fixed-fee for shared usage pricing models is that they create the wrong incentives. Gyms really want customers who pay every month but never come in so they can oversell their capacity. If gyms were pay-for-use you simply wouldn't have this problem. Likewise you could discount memberships for people who come in at non-peak times, etc. Some point out the "you signed a contract" argument and agreed to those terms. To this I response: people have an innate sense of fairness. People will (rightly IMHO) reject unreasonable terms. If I don't pay my gym membership, I can no longer go to the gym. This isn't like failing to make a car payment. Unfortunately consumers seem to like monthly fees so you kind of get what you ask for.
- egypturnash 14y ago
  I suspect the economics of gyms might be such that if it was pay-per-use they'd either have to charge insane rates or go under. It's not so much that consumers like monthly fees as that the gyms like them because they're easy to forget about.
awfabian2 14y ago
Just never give authorization for recurring billing. I use my credit card for one-time payments for monthly services all of the time, and I never authorize recurring billing. When you do that, you establish an on-going relationship with the merchant that isn't so easy to cancel. But you can cancel their authorization to do recurring billing in writing, and then any charge made on that ground should be refunded to you as a simple matter of course. It generally works out pretty well if you just never authorize automatic recurring billing.
kbronson 14y ago
I thought he was talking about an Evil Dead affinity VISA card and I immediately knew I needed one.
adient 14y ago
I'm not sure why the author is so afraid of the chargeback process. If you request a merchant to stop charging you and they refuse or don't acknowledge you, your credit card company will contact the merchant on your behalf to cancel the relationship or block future transactions. It only takes a few minutes to submit the request.
pappabetalar 14y ago
Hmm I have a Visa connected directly to my bank account, (debit?) So far so good, but i also have an app on my phone (Android) from my bank (Handelsbanken) that lets me check/transfer money from my accounts. But i can also LOCK my Visa from being used outside of Sweden and on the internet. So every time i want to buy something on the internet or going to another country i open the app open my card for internet/international use and tada. This service is free and i can Unlock/lock my card as much as i want too.
mmcnickle 14y ago
Thankfully in the UK, Direct Debits[1] are used for most recurring payments and have a lot of protections in place, namely: 1. The payer has the right to cancel the direct debit at any time. 2. The payee cannot alter the date or the amount of the payment without prior notification/authorisation. 3. The bank has no ability to alter the payment instruction after it has been authorised. 4. There is a guarantee in place to return funds in case of a dispute. The bank will process an immediate refund, and it is up to the payee to chase payment. The banks play no part in the dispute resolution process.

181 points by ryangilbert 14y ago

Doesn't everyone know this? You can't enter into a contract with someone and then just pull the payment instrument out from under them. Even if they stopped charging your credit card, they could still sue you for the amount you owe them. You have to cancel your gym membership if you don't want it anymore. Send them a registered letter and CC the state's Attorney General office if they won't cancel the account for you. Edit: Wow, I just realized this is Arrington's blog. Isn't he a lawyer? How can he not know this stuff?

dangrossman 14y ago
"Sending a registered letter" sounds like a "getting ready to sue" legal last resort. You don't have to do things like that to cancel subscriptions with most any other business. Unfortunately that's actually the only way to cancel membership in writing at most major gym chains in the US. They all outsource membership billing to the same company, ABC Financial. ABC has their customers (the gyms) require member cancellations be sent by certified mail. Any cancellation request by phone or mail that isn't sent certified is simply thrown out. If you cancel your credit card, they'll just send you immediately to their collections agency. This is how they guarantee "more revenue from more members than with anyone else". It's such a scummy business. http://www.abcfinancial.com/ http://www.abcfinancial.com/ A Google search for "ABC Financial scam" (in quotes, exact phrase) has over 13,000 results.
- cstejerean 14y ago
  I've yet to see a gym actually go to collecrions. They'll send angry letters threatening things for a few months, and then give up. Don't ask how I know this :)
  - eli 14y ago
    Might want to check your local rules on stale debt before you pop the champagne. They typically have a couple of years. Once they figure out that you aren't going to pay with out a fight, they'd be nuts not to sell your debt -- something is better than nothing.
    - raverbashing 14y ago
      Well, they will sell your debt for, I dunno, 20%? Maybe more, maybe less The buyer will make more angry letters, maybe signed by an attorney, try to negotiate, etc and then maybe go to court
      - eli 14y ago
        You skipped "ruin your credit"
  - encoderer 14y ago
    Maybe you haven't, but it happens all the time. Years ago when I was cleaning-up some credit mess I made when I was still in school I spent a lot of time learning on Creditboards.com and that was a very common collection people would seek help with. Creditboards is a fantastic resource and I cleaned up several small (and one large) collection item from my reports far earlier than the 7.5 years the FCRA lets negative info stay on a report.
- ghshephard 14y ago
  I've had five gym memberships in my life. Every one of them allowed me to cancel the membership by coming into the gym and canceling it. In every case, that method, "Come into the gym and cancel" was written write on the contract. If you are willing to negotiate with the owner/manager, they might even allow you to pay the full year up front - because that's basically the same thing (this was my argument) as signing up for a 1 year membership, and then canceling it the very same day - you are still responsible for the full 12 months, but it would end after one year because you had "cancelled" it. Can you name a gym that won't let you cancel your membership by coming into the gym and doing so?
  - dangrossman 14y ago
    Ballys Fitness, Blast Fitness, Anytime Fitness and Gold's Gym according to just a few of the 90 reports on RipoffReport. I didn't just pull names out of titles, I read the reports and these are people that said they went to their gym to cancel, but kept getting billed by ABC. http://www.ripoffreport.com/directory/ABC-financial.aspx http://www.ripoffreport.com/directory/ABC-financial.aspx
    - ghshephard 14y ago
      I didn't read all of them, but the first, "Golds" caught my attention: == SNIP == "I am currently on the phone (and have been for an hour) with ABC Financial, the company that handles billing for Large Gym chains Golds Gym, Lifequest Fitness (I'm sure there are others). I've been trying to cancel my membership. I've been put on hold 4 times." == SNIP == I've never had a gym membership that, by default, could be canceled via letter/fax/phone call. They all say the same thing, "Come in to the gym in person, and cancel the membership." Most of them also have a clause saying that you are renewed for a year if you don't cancel on your anniversary. I always add a half dozen riders (and have the manager sign it) that says things like "If I get a job or move more than 25 miles away from the gym, I can send in a letter stating that, and cancel via registered mail." - Gym managers are usually reasonable, and will let you do that. Take 15 to 20 minutes to negotiate your Gym contract - you do realize it's a contract, right? In 90% of these cases, people just aren't demonstrating personal responsibility for the contracts they've entered. I'll say it again - never, ever, ever enter a recurring contract (or something that might _be_ a recurring contract) with your credit card, unless you have 100% control over the cancelation and terms.
- jrockway 14y ago
  Yes, this is shady. That's why you involve the Attorney General.
- rdl 14y ago
  For gyms, you can go to Costco and buy a 2-year 24 Hour Fitness all-Sports club membership for $320, prepaid, too.
  - raverbashing 14y ago
    This is very good value (well, it's probably because most people will go 1 month and then quit)
mootothemax 14y ago
You can't enter into a contract with someone and then just pull the payment instrument out from under them. Isn't that a different argument though? I had my wallet stolen at the end of February and would be outraged if charges from any of those cards suddenly went through my bank account. I agree that one shouldn't just walk away from one's commitments, but isn't that what the small claims courts are, in theory at least, meant to enforce?
thaumaturgy 14y ago
I disagree strongly with this. Merchants can (and often do) change the terms of monthly payments, ignore legitimate requests for account cancellations, or even incur monthly charges for things that the cardholder was led to believe was a one-time charge. Cancelling the card has been the cardholder's tactical weapon against that nonsense. It's still a hassle for the cardholder, so I'm left wondering how much of an actual problem it is that people are canceling entire credit card accounts just to wiggle out of a contract. And, in the case that people do that, the merchants have recourse through either collections or court. If enough such charges go to collections, the cardholder loses the ability to open new accounts. If people are no longer able to cancel their credit cards as an item of last resort, then the merchants are left with all the leverage. Arrington's natural response to that -- as I suspect will be most other peoples' -- will be to stop using their credit card. I don't think we want that to happen.
- jrockway 14y ago
  Merchants can (and often do) change the terms of monthly payments, ignore legitimate requests for account cancellations, or even incur monthly charges for things that the cardholder was led to believe was a one-time charge. That's what the dispute process is for. Sign an affidavit saying the merchant violated their contract with you, and the charge goes away.
  - thaumaturgy 14y ago
    I have absolutely no reason to trust credit companies as the unbiased vanguard of consumer protection. Signing an affidavit merely begins a process where the charge might go away, and I would expect that the process will get slower while ending up in the customer's favor less often.
    - aneth4 14y ago
      Except that consumers almost always win such disputes and they are really not very burdensome. So bitching about this process is really just bitching.
    - 14y ago
eli 14y ago
I think you misunderstood him. It's just as likely that the gym is trying to screw the customer by ignoring a valid request to cancel (even one sent via certified mail) than a customer trying to welch on a contract.
- jrockway 14y ago
  I'm sure the gym is trying to screw him. They make money when you don't show up, not when you do. That's why you read the contract before signing it, and negotiate it to something less shady. Or take your business elsewhere. Like I said in another reply, you mail the Attorney General's office so that if there's a pattern of screwing customers, the state can take appropriate action.
  - eli 14y ago
    I don't follow your point. If I'm getting screwed shouldn't I be able to prevent them from automatically billing me (in addition to mailing my attorney general, which seems does not seem likely to resolve the situation in the short-term)? Why can't I cancel a recurring billing relationship just like I can cancel a check?
bandushrew 14y ago
I absolutely should be able to deny them access to my credit card, unless the courts specify otherwise. WTH is the bank doiing, enforcing the terms of a contract I have with a third party? since when is that the job of the bank? Yes, the third party can sue me. Thats fine, but I must be able to maintain control over my own bank account.
- learc83 14y ago
  I'm willing to be that somewhere in your cardholder agreement you give the bank the right to pay recurring charges on your behalf--as if you gave them the ability to act as your agent. An ability that apparently according to recent legislation you can't rescind merely by cancelling your card.

ams6110 14y ago

To play devil's advocate, you should not be able to just close your credit card account and be able to walk away from a contractual recurring payment agreement into which you entered.

jrockway 14y ago
Indeed. Though I'm sure the gym's merchant account requires them to stop charging a particular credit card if you ask them. You can then switch to paying by cash, stop paying, default on the account, and then go through the whole collections thing. The OP did learn a valuable lesson, though: don't enter into a contract you don't agree to, expecting to have someone else get you out of it.
gmrple 14y ago
But is it the bank's responsibility to enforce the contract? I would rather have a civil court be the recourse for a broken contract than for a third non-governmental party to handle it. I suppose if it was written into the contract that the bank would perform this role prior to the card being obtained and this being made abundantly clear to both sides things would be a little different. Still, ideally I would have the bank as the holder and mover of funds at the will of the cardholder, not someone outside of the contract between the bank and cardholder.
- euroclydon 14y ago
  Oops, meant to upvote you. I agree. I guess when you agree to use credit cards you're not just using a payment instrument the bank has made for your convenience, but choosing to use a system which the banks find lucrative and the merchant exert a good deal of control over. Consumers are not as politically proactive as merchants so we can't be surprised to find the laws favor the merchants. [edit] Someone upstream mentioned authorizations. I'd like to know more about how authorizations work with subscriptions. Do they keep a rolling six month queue of auths or is there a seperate and unique structure for recurring payments?
  - chimeracoder 14y ago

zampano 14y ago

Why not just call the gym in question? I've had numerous accounts with recurring charges, but I've never dealt with them by changing account or card numbers.

redslazer 14y ago
Have you ever attempted to cancel a Gym membership? It is near impossible.
- adient 14y ago
  Why? I've had to switch between a few different gym companies over the years and never had any trouble.

ben1040 14y ago

Back in 2000 my wallet, including my Visa check card and other credit cards, was stolen in Paris. I called the bank right away, got cards canceled, had new ones ordered and all that. I get my checking account statement and see several charges that the thief made before I was able to get the card canceled. My bank cheerfully reversed those and I thought nothing of it. Four months later, I see a charge on my statement from one of the same merchants as before. I called my bank, and they said that the merchant had authorized my card, but did not proceed to capture the payment until then. I asked why this happened on a canceled card, and was told the authorization happened before the card was reported stolen so they had to honor it. They told me the merchant had six months to capture the payment, and it basically was as if I had written them a check and they sat on it for months. Clearly the thief had some buddy with a merchant account, and they were trying to see if they could sneak a charge in later without me noticing it. I asked my bank if there was a way for them to see if there were more of these charges in the pipeline, because I had written some checks and it would be highly inconvenient to me if they bounced. They said they had no way of knowing. The only way to stop these from going through was to close the checking account, which would also mean the checks I've written were going to bounce anyway. So I just had to wait out two more months and hope nothing more happened. Luckily, that was the only instance.

encoderer 14y ago
One of the several reasons Debit cards are much worse and anti-consumer than Credit cards. People think that because it has a Visa logo and their bank has a limited fraud liability policy that they're safe. That their debit cards have the same consumer protections as credit cards. That's just not the case. Moreover, if you swipe-and-sign for anything you should be getting rewards or cash-back. Very few debit cards offer rewards, and the ones that do are often less lucrative than those offered on credit cards.
- soult 14y ago
  I don't know how debit cards work in the US, but I need a PIN to use my debit card, so short of being forced to withdraw money at gunpoint, you won't get any access to my bank account.

phn 14y ago

I don't know where this is from. But in Portugal, I really feel blessed by the MBNet service that exists here. Basically you tie it to any card (credit/debit) and generate temporary credit card numbers with a hard value limit defined at the time of creation. Want to buy a 10$ game, generate a card with a slightly larger value and pay with it. If the merchant tries to take more, it is denied and the card automatically cancelled. I am amazed this doesn't exist elsewhere (if it does I have never heard of it). Even banks themselves could provide something like this. EDIT: I don't know how it actually works if you want to pay by credit. I generally generate cards with values that my bank account can cover.

vasco 14y ago
Just to add something regarding MBNet, it is also now possible to create a virtual credit card for multiple transactions, I believe up to a year. But it will never go over whatever limit you set at the beginning. It's a great payment method indeed.
X-Istence 14y ago
Bank of America, my credit card provider provides the same sort of service. They call it ShopSafe. You generate a temporary credit card number with a certain limit and you can set when it expires. It is fantastic for purchasing goods from web sites that may not secure their card data completely, or if you are worried about fraud on the internet. I've also in the past generated the numbers for when I need to pay over the phone and don't want to hand out my credit card number! Extremely handy, unfortunately it seems that not enough people make use of it, to the point that BoA employees in the fraud department are at times not even aware that the feature exists...
- chimeracoder 14y ago
  Are there fees attached to this? I'd be interested in using this, but I get so frustrated with Bank of America's fees. They want to charge $10/month just for using OFX to access your own financial transactions! Given the level of security that most banks implement, this is completely indefensible in my books (given that the same information is available through the shoddy web interface).

bencoder 14y ago

Had a friend who cancelled an old mobile phone contract. He kept the old phone and sim in a drawer somewhere. House got broken into and the old phone was stolen but my friend didn't notice the missing phone since it wasn't used anymore. Thief managed to call up the phone company and get the contract re-instated. Friend received bills for thousands. Cut up your old sim cards.

ericb 14y ago

I closed an account, and moved. Had this happen, go to collections, damage my credit, and had no idea.

efa 14y ago

I noticed this a few months back. I had cancelled an Amex card and get a new one (brand new number). My old one was saved in my Amazon profile. I charged to that old account a couple times before I realized that that was the card I cancelled. But it worked fine. To this day I can still pick that card when checking out of Amazon with no issue.

ghshephard 14y ago

This makes sense somewhat - if you could get out of a contract with a merchant, simply by canceling your credit card, then why bother to uphold your obligations (multiple payments, length of relationship) etc... Just get whatever benefits you want, then cancel the card and wave goodbye to the merchant. That would be _particularly_ problematic on a multiple-payment scenario. The net-net is _never_ give your credit card to anyone who suggests they will charge you, unless you have full control over that relationship. It's the key reason why I subscribe to all my magazines and newspapers (key exception being the WSJ) through iTunes - single place to control subscriptions - with the added bonus that I get reminded every month that there will be a renewal coming up. I also negotiated with my Gym to allow me to pay the full year up front + initiation fee to avoid having to give them my credit card - It was amazing how difficult it was for me to convince them to allow me to give them $410 up front for a $30/month gym membership. They really make a lot of money off of people who don't want to come into the gym and cancel, or forget to do so on their "Annual" anniversary when they get signed up for another year. Most of us are in our early 20s when we discover the downsides of recurring credit card charges - I'm surprised that someone as savvy as Arrington is discovering that he can't just cancel his account to end those recurring charges - I thought it was something that students usually do and discover doesn't work. I certainly did when I was a student.

dclowd9901 14y ago
No, if you have purchases on your agreement prior to cancellation, it's obvious that you are beholden to these purchases. These are within contractual guidelines and sensible. If a merchant tries to charge my card, and finds that they cannot, they can end their relationship with me, and if, for some reason, cannot reconcile outstanding costs through traditional means, can utilize collections agencies or any other means they wish to obtain their due. This is not only nonsensical, but legally questionable at best, and I'm very surprised this is the first I've seen anyone bring a point against it.
- ghshephard 14y ago
  My gym offers a membership - $30/month with credit card and a one year term, no initiation fee, or $50/month, $75 initiation fee on a month-by-month basis. When I sign up for the one year membership, I put my signature on a contract, indicating that I will oblige by all the conditions. Should I be allowed to sign up for the one year term, and then cancel my credit card after a couple months? Whenever you enter a contract, there are conditions that must be fulfilled to cancel that contract. Simply saying "I didn't read those conditions" or "I don't want the product anymore" is not a sufficient condition to terminate the contract. And thinking that you can get out of it by "canceling the credit card" is naive in my opinion.

deleted 14y ago

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GuiA 14y ago

Use a debit card (and tick the box that prevents your account from being overdraft when you don't have enough funds if it's not there by default). If there's no money on the card, transactions will go through.

aneth4 14y ago

Is anyone surprised that Michael Arrington has soured relations with a vendor enough that they'd refuse to talk to him? Not I. The dispute resolution process deals with these sorts of things and punishes merchants who repeatedly violate rules. Strategy number one is to not be a dick. People respond better that way and you won't end up in the situations Michael Arrington always seems to end up in. I probably deal with as many merchants and as much travel as him and have always resolved such issues amicably.

rdl 14y ago

My solution to this is to use an American Express card. Every single time I've had a problem, domestic or international, they've been on my side, and disputes are easy to handle. (the correct Amex cards to have are Starwood Preferred Guest for USA use and Platinum for international or status (lounge access, etc.) use.)

learc83 14y ago
Interestingly the one time I had a chargeback dispute with an Amex customer--even though I won the dispute (I had clear evidence--video, signatures etc...)--Amex still credited both my account and the customer's for the full amount.
- rdl 14y ago
  Amex is the Apple of the payment world -- they control and brand the whole thing end to end, and own the high end, charging a slight premium for some things when the market will bear it (and were both far larger premiums and lower volumes in the past). With Visa/MC, it's a card association (until recently, a non-profit), and an issuing bank. The issuing bank may have a bunch of banking relationships with you (so you're unlikely to walk over a credit card), or only a credit card (so you're not that valuable to them anyway), and doesn't have as much incentive to protect the card association brand. End user consumers almost never contact the card association itself.
khyryk 14y ago
What do you mean by "the correct Amex cards to have"?
- rdl 14y ago
  Maximum value of rewards points and other benefits vs. annual fees. Centurion (Black) is pretty much the same as Platinum, with a 6x higher fee. It used to be a lot cheaper than it is now AND have more benefits, but it's been substantially devalued. Platinum does provide a lot of perks just for having one (lounge access, etc.) worth about $500+/yr, as long as you travel. It also has no international fee. SPG gives effectively 5% return if you use it aggressively. The problem is a high international fee.

charlieok 14y ago

The basic affordances underlying credit cards are backward: “Here's my wallet -- go ahead and take what you think you need.” Carrying a computer (i.e. phone) running a user agent can vastly improve the interaction. Something like: 1. Transmit an identifier from user agent to merchant via radio, barcode, or some other method. 2. Merchant's system asks user agent (either directly or through a service such as the user's bank) for a dollar amount. 3. User agent asks the user: "do you accept this charge? yes/no" At no point is the merchant given a piece of information that allows them to charge whatever amount they want. The transaction isn't complete before the user approves the amount on their own device. It's kind of amazing we haven't switched to something along these lines already.

Evbn 14y ago
Every month, your card company sends you a list of charges. If any of them are illegitimate, you tell the company, and don't pay, and they investigate. That's basically the same as your proposal. Your credit card number is like a public key, if you will. Checks are worse. They pay out immediately without asking for approval.
- charlieok 14y ago
  No, it isn't the same. I don't want to wait until the end of the month. The information about this transaction is freshest in my mind at the exact hour and minute I enter into it. I want a notification on my phone immediately: "(Merchant X) requests a payment of ($Y). Do you accept this charge? ( ) yes ( ) no [ ] Auto-apply this answer to future requests from this merchant" The notion that I shoudn't, by default, have a role in approving each and every transaction before it goes through is a holdover from the days when I didn't have an always-connected computer in my pocket. If I never approve it in the first place, there's no wrong that needs to be righted, no fraud that needs to be investigated. I just got some spam asking for money. I marked it as spam to keep from being flooded in the future by the same spammer, and that's it.
olefoo 14y ago
I can already hear someone asking "Is it PCI Compliant?". Unfortunately payment technology, and monetary exchange in general is so valuable that frozen accidents stay because implementing something better would be detrimental to an incumbent's revenue stream. Bitcoin :P

cletus 14y ago

It is interesting that charges can be put through after a card is cancelled. I, for one, did not know that. I've cancelled cards previously because merchants were unreasonable or unresponsive. Gyms are one of the worst for this. Cancelling a gym membership is an exercise in torture. Anecdote: I was in an Equinox gym a couple of months ago, thinking about joining. I saw a "representative" who was happy to give a tour through the gym and explain the costs and benefits. For these sorts of things however I give a fake phone number because I loathe the follow-up calls from such places. Anyway, at one point while standing around reception where there were 5 or so such representatives standing around the receptionist answered the phone. Someone was inquiring about closing their account. She said they had to speak to a specialist and none were available. What the...? No one else seemed to be with a customer. It just struck me as another tactic to make it more difficult to cancel. Now for me this would be relatively easy. My company has a corporate membership so it can be deducted directly from payroll and when I say for it to stop, it stops. But honestly I can't condone these hard sell tactics by giving such companies my money. Cancelling a gym membership should be as simple as a 2 minute phone call or (better yet) clicking a button on a Website (Equinox has a Website where you can reserve exercise bikes no less). My only experience with dispute resolution was reasonably painful although not as bad as it could be. I ordered something online and the merchant called me to say that price was only when I bought it as part of a package. I said I didn't want it. He said fine. A week later it turned up anyway. I had the charge reversed. They applied it again. I had it reversed (again). I had to send the item back by registered post. I think the lesson to take from gym memberships and similar fixed-fee for shared usage pricing models is that they create the wrong incentives. Gyms really want customers who pay every month but never come in so they can oversell their capacity. If gyms were pay-for-use you simply wouldn't have this problem. Likewise you could discount memberships for people who come in at non-peak times, etc. Some point out the "you signed a contract" argument and agreed to those terms. To this I response: people have an innate sense of fairness. People will (rightly IMHO) reject unreasonable terms. If I don't pay my gym membership, I can no longer go to the gym. This isn't like failing to make a car payment. Unfortunately consumers seem to like monthly fees so you kind of get what you ask for.

egypturnash 14y ago
I suspect the economics of gyms might be such that if it was pay-per-use they'd either have to charge insane rates or go under. It's not so much that consumers like monthly fees as that the gyms like them because they're easy to forget about.

awfabian2 14y ago

Just never give authorization for recurring billing. I use my credit card for one-time payments for monthly services all of the time, and I never authorize recurring billing. When you do that, you establish an on-going relationship with the merchant that isn't so easy to cancel. But you can cancel their authorization to do recurring billing in writing, and then any charge made on that ground should be refunded to you as a simple matter of course. It generally works out pretty well if you just never authorize automatic recurring billing.

kbronson 14y ago

I thought he was talking about an Evil Dead affinity VISA card and I immediately knew I needed one.

adient 14y ago

I'm not sure why the author is so afraid of the chargeback process. If you request a merchant to stop charging you and they refuse or don't acknowledge you, your credit card company will contact the merchant on your behalf to cancel the relationship or block future transactions. It only takes a few minutes to submit the request.

pappabetalar 14y ago

Hmm I have a Visa connected directly to my bank account, (debit?) So far so good, but i also have an app on my phone (Android) from my bank (Handelsbanken) that lets me check/transfer money from my accounts. But i can also LOCK my Visa from being used outside of Sweden and on the internet. So every time i want to buy something on the internet or going to another country i open the app open my card for internet/international use and tada. This service is free and i can Unlock/lock my card as much as i want too.

mmcnickle 14y ago

Thankfully in the UK, Direct Debits[1] are used for most recurring payments and have a lot of protections in place, namely: 1. The payer has the right to cancel the direct debit at any time. 2. The payee cannot alter the date or the amount of the payment without prior notification/authorisation. 3. The bank has no ability to alter the payment instruction after it has been authorised. 4. There is a guarantee in place to return funds in case of a dispute. The bank will process an immediate refund, and it is up to the payee to chase payment. The banks play no part in the dispute resolution process.