Can a Business Charge a Credit Card Without Consent?

Many customers overlook recurring charges on their accounts, but it is important to know whether a business can charge your credit card without your consent.

Are Companies Within Their Rights to Charge a Credit Card Without Consent?

paperwork on deskExperts say that generally, no, a business cannot charge a credit card without the card holder’s consent; however, there are some situations where consent is not always obvious, especially when it comes to automatic payments or recurring charges. If a consumer learns that a company plans to charge a credit card without consent, he or she may choose to do business elsewhere.

Under the Electronic Funds Transfer Act, consumers must provide consent before their credit or debit card can be charged. Any charges made without permission are considered “unauthorized” and consumers can dispute the charge. Consent can be obtained in several ways under the Act:

  • Swiping a signed card and signing a receipt;
  • Completing an online form; or
  • Providing credit or debit card information over the phone.

Credit card companies also have rules for obtaining consent and processing transactions properly. If companies don’t follow these rules, cardholders can dispute any charges.

Subscriptions and auto-renewal services are a grey area, however. Consumers have complained about unexpected and hard to cancel recurring charges that appear on their financial statements. Additionally, several major companies have been hit with legal action over allegedly deceptive auto-renew charges. Recently, state legislatures have enacted laws protecting consumers and requiring companies using auto-renew to meet strict standards. Some consumers, however, still wonder whether a company can charge a credit card without consent.

Various state laws and other standards generally require that companies offering auto-renewal must:

  • Provide clear and conspicuous terms of the auto-renew;
  • Obtaining affirmative consent;
  • Notify consumers of the terms;
  • Provide clear cancellation terms;
  • Provide easy ways to cancel the auto-renewal;
  • Provide notification of any changes to the auto-renewal; and
  • Providing notice of upcoming auto-renewal charges.

Avoiding Auto-Renewal Charges

Unfortunately, despite state efforts to curb deceptive auto-renew practices, consumers still must take steps to avoid unexpected auto-renewal charges. Consumers should be careful when providing credit or debit card information online and wary of free trials or services that require financial information to access. Experts recommend researching companies online before making a purchase to see if others have complained about deceptive charges.

Consumers who have already been hit by unexpected charges can notify their credit card company to try and cancel the auto-renewal as a disputed charge. The credit card used for the auto-renewal can also be canceled; however, experts warn that this can create a debt that can potentially be reported to the credit bureaus, so consumers should be cautious.

A simple email or phone call should be enough to stop an unwanted auto-renewal charge; however, a common consumer complaint is that auto-renewals are hard to cancel. If a company makes it impossible to cancel the auto-renewal, the FTC provides instructions for disputing credit card charges and filing complaints about companies on their website.

If you believe you have been hit with an auto-renewal charge you did not agree to, contact the experienced attorneys at Bradley/Grombacher.