Charged without consent
Complaint
S_Mac
Country: United States
I have a credit card which goes through HSBC. I keep a 0 balance. I tried using my card for a small purchase and was denied. When I checked the website to see my balance, I incurred a $20 late free which was past due. I complained and the credit card company took care of it, but why did it happen? Isn't it against the law to charge a credit card without the cardholders consent? I'm pissed and I don't trust this company. $1 or $100, that is not right. And if people don't keep a 0 balance, they are probably beig charged and don't know it.
Comments
These products are often sold through third party marketers to which the bank provides customer billing information. Since they already have customer billing information, amd are often incentivized by bonus or commission structures, the third party marketers, who may be engaged in telemarketing, have every incentive to cheat and fabricate falsified customer "authorizations".
Even though FTC requires "verifiable authorization", generally through recording of the customer's agreement including the customer providing the last four digits of their account number, such "authorization" is only questioned if the customer catches the unauthorized charge, and any "error" is often dismissed by the bank as just a mistake, or maybe the customer "forgot". In effect, the "verifiable authorization" is not verifiable at all.
The result is unauthorized charge cramming, and since these "services" are set up as "negative-option" automatic monthly charges, consumers often only notice them months after charges have accumulated. By that time, banks often refuse to refund more than the last 60 days, or even just refer the defrauded consumer back to the third party telemarketer, who gets another chance to "sell" the consumer on their great product, while avoiding classifying the disputed charges as either unauthorized or fraudulent. This hides the level of such fraud from auditors.
For a glimpse at several reported bank connected cramming scams, see here.
https://complaintwire.org/Complaint.aspx/tYc4K1wNsACmMAjLZ-BuTg
One way to block attempts at bank connected charge cramming is to notify your bank that you "opt-out" of all information sharing, with both bank affiliates and third parties. That is what those GLB "privacy notices" are telling you about. In some states, notably California, state law makes "opt-out" the default, and you would have to specifically "opt-in" for your bank to share your information with other marketers.
Although your bank reversed the unauthorized charges, follow up with a WRITTEN DISPUTE or FRAUD AFFIDAVIT, mailed certified to your bank's dispute address from your statement, and sent within 60 days of the statement date of the statement showing the disputed charges, to dispute in accordance with FCBA (for credit card disputes), or FRB Reg. E (for checking account or debit card EFT disputes).
Keep a close eye on your statements, since once these charges start, even when they are reversed, they may restart several months later due to the account information being in untrustworthy hands. Some banks are more trustworthy in this respect, in some cases because they have already been sued and reached settlements with state Attorneys General.
As noted above, you should also send notice to block disclosure of your financial information to both affiliated and third parties.