# Bank honours  Direct Debit on closed Credit Card account



## MoodyToo (2 Oct 2006)

I cancelled my Credit card (CC) with BOI and closed the CC account in November 2005. I faxed the relevant forms and recieved confirmation that the acount was closed. I never received a statement again.
However I forgot to update my Direct Debit details with one third party company, so this company had my old CC details on file. The company takes a 300 euro subscription payment once a year. This month I get a credit card statment from BOI on the old CC account, listing the amount owed, my credit limit etc. as if the account was never closed. They have paid the Direct Debit to the company and want a minimum payment and will charge interest etc.
I would have thought that the payment should have been refused but BOI tell me that it is their policy to pay out a DD even if the card is cancelled and account closed.
I have no issue with the third party company, I would have paid the subscription anyway and of course they had no way of knowing the payment details were out of date.
But are BOI Credit card Services really in their rights to do this, who can I go to for advice on this, it seems very sharp practice. I am now in debt to BOI credit card services again, a full year after I closed the account?


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## CCOVICH (2 Oct 2006)

MoodyToo said:
			
		

> However I forgot to update my Direct Debit details with one third party company, so this company had my old CC details on file.


CC providers normally inform you that you are responsible for all DDs on an account-did BoI do this?  What does your card agreement say?


			
				MoodyToo said:
			
		

> But are BOI Credit card Services really in their rights to do this, who can I go to for advice on this, it seems very sharp practice. I am now in debt to BOI credit card services again, a full year after I closed the account?


 
I don't think you have any case-you didn't update your DD details with the third party company.

Bear in mind that if we could get out of legimate transactions carried out but not yet processed by closing the cc account we would all do very well.


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## MoodyToo (2 Oct 2006)

CCOVICH said:


> CC providers normally inform you that you are responsible for all DDs on an account-did BoI do this?  What does your card agreement say?
> 
> 
> I don't think you have any case-you didn't update your DD details with the third party company.
> ...


Yes I was informed about my reponsibility. I acknowledge this. However I would have thought that the payment would be refused anyway and the third party company would contact me and I would give them my new CC details. The reason I thought this is because this is exactly what happened when I reported my CC stolen to BOI about two years ago. That time BOI refused all DDs and I had to update my details with each company. So if BOI can refuse a DD to save themselves from potential loss then they could refuse a DD in this case also. The difference is that it suits them to pay the DD in the current instance.

You'll notice in my first post I said i had no issue paying the subscription so I was not trying to get out of paying anything.

MoodyToo.


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## CCOVICH (2 Oct 2006)

Comparing this situation with a stolen card scenario isn't really like with like-this is a genuine transaction, whereas transactions undertaken when a card is stolen are considerably more likely to be fraudulent.



			
				MoodyToo said:
			
		

> You'll notice in my first post I said i had no issue paying the subscription so I was not trying to get out of paying anything.


 
And I wasn't accusing you of such-I was merely trying to give a reason why BoI would honour the transaction.

And if you are happy to pay the subscription, what exactly are you looking for from BoI or anyone else?  Does it really matter that you are paying the money to BoI and not another CC company, or to the third party directly?

I had closed my account well over a year previously before a manual transaction undertaken in Croatia was processed.


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## zag (2 Oct 2006)

I have never understood the logic behind credit card providers accepting transactions on a closed account.

If the account is closed, then it should stay closed.  If the bank feel that the account is somehow not closed, then surely *they* are obliged to pay €40 stamp duty over to the revenue (out of their own funds) every year just as they do for all the other live credit card accounts.

MoodyToo - expect a €40 stamp duty bill on this account for the year.  I wouldn't be happy with this.

CCOVICH - I don't agree that it is a genuine transaction in this case.  The company putting the transaction through believe it to be genuine, but the credit card provider should be able to enlighten them by telling them the account is closed and so the transaction is not valid.  It's just like a bounced cheque - there is no requirement for the bank or credit card provider to honour the transaction, especially when their customer has specifically closed the account.  Sure . . . the bank or provider can do so if they want, but they don't seem to feel the need to do this with cheques, so why is it different for credit cards ?

z


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## MoodyToo (2 Oct 2006)

CCOVICH said:


> And if you are happy to pay the subscription, what exactly are you looking for from BoI or anyone else?  Does it really matter that you are paying the money to BoI and not another CC company, or to the third party directly?


My issue is that a year after I tried to get rid of the credit card, they still have their claws in me. If I can't afford to clear the bill in full this month I'll be paying interest.
Also note that after 3 phone calls the bank can still not tell me if I have now cancelled all DDs on the card. They don't have an easy access list of the DDs associated with the card so they could only give me a list by manually going back through the statements. I was told I "should be ok now".
If the bank was genuine they would give you a list of DDs on your card on request and when you cancel it.


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## MoodyToo (2 Oct 2006)

zag said:


> MoodyToo - expect a €40 stamp duty bill on this account for the year.  I wouldn't be happy with this.
> z



Ouch, never thought of that. I have a feeling this saga with the bank will continue. So easy to get a card, so difficult to cancel it.


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## CCOVICH (2 Oct 2006)

zag said:


> I have never understood the logic behind credit card providers accepting transactions on a closed account.


 
What about in cases I have outlined above-I undertake a transaction, but close the account before it is processed? Surely I should still be charged?

Bear in mind there is nothing to stop you disputing genuinley false transactions, nor is there anything to stop you settling a transaction in cash with the third party provider and them refunding your credit card (but there may be an issue with refunding closed accounts!)



			
				zag said:
			
		

> MoodyToo - expect a €40 stamp duty bill on this account for the year. I wouldn't be happy with this.


 
Not in my experience-I was not charged €40 when a transaction was processed on my account after I had closed it a year earlier-remember that the account is in fact closed.



			
				zag said:
			
		

> CCOVICH - I don't agree that it is a genuine transaction in this case. The company putting the transaction through believe it to be genuine, but the credit card provider should be able to enlighten them by telling them the account is closed and so the transaction is not valid. It's just like a bounced cheque - there is no requirement for the bank or credit card provider to honour the transaction, especially when their customer has specifically closed the account. Sure . . . the bank or provider can do so if they want, but they don't seem to feel the need to do this with cheques, so why is it different for credit cards ?


 
I can't say why it is different for credit cards, but I believe that the terms and conditions of credit cards allow for this scenario.


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## MoodyToo (2 Oct 2006)

CCOVICH, Zag,
Thanks for the advice. I suppose the real issue here is that I signed up for the card and quickly agreed to loads of conditions that I didn't think through. I need to take some responsibility here.


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## CCOVICH (2 Oct 2006)

_MoodyToo_-I understand your frustration-I too have had problems with BoI Card Services and will never use them again, nor would I recommend them to anyone else.  Whether we agree/disagree with the fact that they can process transactions on a closed account is somewhat irrelevant-as far as I know, they are within their rights to do so.  

Why this is the case for credit cards, but not, say, cheques, I can't say-but bear in mind that when a bank 'bounces' a cheque, you will be charged.

As I said above, I don't think you will be charged stamp duty for this year-I wasn't, and if you are, I would dispute same-BoI will tell you the account is closed, so ask them how you can be charged stamp duty.

There is a lesson here for everyone-don't depend on banks to do you any favours (such as give you a list of all DDs etc.)-monitor this yourself (it makes sense anyway) to ensure situations as described above are avoided.


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## Alun (2 Oct 2006)

A few years back I got a letter from the fraud prevention service of Mastercard querying a suspect (internet) transaction on a CC that I had cancelled 6 months previously. When I questioned how that was possible, they told me that although I had cancelled the card, the account remained active for a good while after that (can't remember how long, now, but I think it was a year) to allow any outstanding transactions to complete.


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## daltonr (4 Oct 2006)

I was in exactly this position some time ago when I closed an AIB Credit Card Account.

I spent almost an hour in a heated phone conversation making the points Zag made above.  But I was basically told there was nothing I could do about it.  The CC company will honour all Direct Debits even after the account is closed.

Here's the kicker.  The account was not only closed, it had expired.  I got no new card when the old one passed it's expiry date (because the account was closed),  but still it was possible for someone to make a charge against it.

I asked what would happen if an incorrect or fraudulent charge was made against a closed (and expired) account.  She said I'd get a statement showing the charge and I could write to them to get it removed.

So...in theory years from now if any company I ever had a direct debit with felt like charging a couple of quid to an old credit card,   I'd have to deal with it as a fraudulent charge in order to get a refund.

Since then I have never had and will never have a direct debit of any kind, even on my bank accounts.  It's just not worth it.


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## Guest127 (4 Oct 2006)

I have the opposite situation re mbna. I was paying my piggysurf dial up connection with a 'standing' credit card payment through mbna. the card expired and mbna automatically issued a new one with new pin, new checkbook etc. pigsback rang me after about two months to ask me for my new credit card number as mbna wouldnt pay on the old number. new card expires next march so it will be interesting to see if anyone on the new card ( bt for one) has to have the new number. I WOULDN'T pay the €40 government levy in this case.


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## Vanilla (5 Oct 2006)

Happened to me too on an old AIB VISA- had cancelled all dds except for the AA (thats the automobile assoc, rather than alcoholics anon. ) who I just forgot about. So the AA subscription was deducted and I contacted the bank who gave me the same sceal as above. I contacted AA and cancelled dd, and lo and behold the next year same thing happened. AA denied ever cancelling dd, AIB wouldnt help! So annoying. Anyway I asked AIB if I had to pay the gov duty, but they said no- the card was inactive and no duty was due, and in fairness I never did get a bill for it.


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## zag (5 Oct 2006)

Vanilla - I think there is something iffy in the banks response re: the stamp duty.  I remember reading the credit card stamp duty legislation (or SI or whatever it was) and it was pretty clear that the bank had to remit the money to the Revenue for *every* account in existence during the year.  They were then entitled to go after the customer for the repayment, but in the first instance the bank had to pay it.

They shouldn't have an option, and I can't see the banks voluntarily swallowing €40 for every 'account' in this situation.

I think I will drag out the details again and see what it says.

z


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## daltonr (5 Oct 2006)

What's more interesting is that when my card was about to expire, I received a letter from An Post (who I had the DD with) telling me that they needed my new Credit Card details or they couldn't continue the Direct Debit.

I didn't send them the details of the new card, because I didn't have them yet.  I assumed that based on their letter their DD would end and I'd contact them again in the future with a new card to set up a new DD.

That's the only reason I didn't try explicitly cancelling the DD.

So we have a vendor who tells you they won't be charging your card.
The Card Expires, AND you close the Credit Card Account.
And still, somehow months later a charge can be made to the card and you are responsible for it and any interest that accumulates on it.
What happens if you've moved house?

When I tried explaining this to the girl on the phone, she tried to tell me that I was that one that wasn't making sense.  It's a nonsense.

-Richard


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## nlgbbbblth (5 Oct 2006)

Direct debits being taken from a credit card account is something I do not recommend.

If you must pay a bill by direct debit use an ordinary bank account.

Better still, avoid direct debits as much as you can. Control of the payment should be with yourself not the direct debit originator.


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## Vanilla (6 Oct 2006)

Zag- you'll forgive me if I don't advise AIB as to what you've said...


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## identity (6 Oct 2006)

The crux of the issue is really that a direct debit is an agreement between the credit card owner and the company involved facilitated by the bank so it must be cancelled with the company firstly.


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## zag (6 Oct 2006)

Hmm.

The information out there on Revenue & gov.ie websites isn't great.  I haven't been able to track down the legislation which made the most recent set of changes (and which would be definitive as it is the document which officially give rise to the stamp duty) so this is all from guidance documents, and even then some of them are out of date.

[broken link removed] - "Credit Card accounts, which have no transactions during the year, are still subject to stamp duty on the basis that the account is maintained during the relevant twelve-month period." - so if the bank either maintains the 'closed' account or re-opens it then the stamp duty is due.

[broken link removed] - "1.2 Charge to stamp duty - Stamp duty of €40 is chargeable in respect of each credit card account, maintained by a financial institution at any time during the twelve month period ending on 1 April, referred to as the year of charge. Financial institutions must submit a statement within 3 months of 1 April each year, showing details of credit card accounts maintained during that 12-month period. The statement must be accompanied by payment of the duty involved."

[broken link removed] - "1.9 Revoked Accounts - In certain situations a cardholder’s account is revoked and the cardholder is unable to obtain goods, services or cash and charge it to their account. In these circumstances, if the card account has a revoked status for the entire year of charge, it is not liable for stamp duty. If for any reason the revoked status is removed and the cardholder is allowed to charge goods, services or cash to the account for any part of the year of charge then the account is again liable for duty in that year of charge"  - a revoked account is clearly not a closed account.

It is interesting to note (though possibly moot for anyone reading this) that a card held in the year of death of the card holder is not subject to the stamp duty.  Seems a very peculiar exception to the rule.

I'm going to fire one off to the Revenue to clarify whether the banks should be paying this stamp duty.

z


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## ClubMan (6 Oct 2006)

Is this any use?

[broken link removed]


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## bond-007 (9 Oct 2006)

Also in practice DD's from credit cards cannot be cancelled in the same manner as a DD from a current account.


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## vector (9 Oct 2006)

bond-007 said:


> Also in practice DD's from credit cards cannot be cancelled in the same manner as a DD from a current account.



yes you are correct, BT Ireland (who I used to get broadband from) keep charging my credit card every 2 months for a service that is cancelled, I ring my credit car provider and they do a charge back every time, there seems to be no permanent solution, until my card expires


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## bond-007 (9 Oct 2006)

Even then you won't be safe. Even changing your card number won't work.


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## Vanilla (10 Oct 2006)

Could you report it stolen/lost ? This seems to have worked for another poster.


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## bond-007 (10 Oct 2006)

I tried that with AIB many years ago. DD's continued to be honoured on the old now reported stolen number.


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## liteweight (10 Oct 2006)

This has happened to us a couple of times. Once when I was young, I was asked to participate in a charity walk for disabled children. In order for me to accompany said children they needed to check out my ID.....bank account etc. I gave the details and signed up. My only excuse is that I was 20 and these types of scams were not prevalent in Dublin at the time. In fact I had signed a direct debit mandate!! They took ten pounds out of my account. I rang the bank to query it and was informed of the DD. They said they couldn't refund the money but would cancel the DD. The following year the same amount came out of my account. This time I kicked up such a fuss at the branch that they refunded the money and cancelled the DD. Luckily, I had put the complaint in writing in the first year and had also received a reply in writing from the bank in question.

The next time was when we hired a car in Spain and paid by CC. All was well, the bill came through, but the following month there was another charge from the car hire company. We rang MBNA and stated that this was not correct. We had receipts for the car hire and the full amount was already paid. MBNA said there was nothing we could do...the car hire company had my husbands signature on the slip. It transpired that this was the deposit slip, which we thought had been torn up in front of us. We didn't have a leg to stand on apparently unless we got the Spanish police involved. We were advised that the guy in the car hire company could say he'd found damage to the car and that he never tore up the slip. Lesson learned, we always go to one of the big outfits for car hire now.

Last year Mr. LW wanted to try out BT broadband. He had to give his credit card no. All was well, he took the free trial and then cancelled. We also have our telephone account with BT. When the bills arrive, they are marked 'thank you for your payment'. We had no balance with MBNA and so when his statements came in (after checking the first few times), Mr. LW just filed them. However, when I came to do the accounts, I noticed our telephone bill was no longer being paid out of his current account.....it was being paid through MBNA!! When I checked the statement there were interest and late payment fees, which are quite hefty with MBNA. I rang them and complained but to no avail as he had given his number. We had not given permission for the card to be used in this way however. Eventually MBNA capitulated and refunded the late payment fees but would not budge on the interest. BT were quite frankly abusive about the whole thing and could not give me a satisfactory answer other than 'that's the way we operate....deal with it'! I was fuming! Mr LW got back on line and deleted his credit card details. The bill was due to BT, I have no dispute with that but how they can stop taking a direct debit out of a current account and charge it to a credit card, given as a guarantee only, is simply beyond me. The story continues.............


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