It’s easy enough to do. You sign up for a ‘free trial’, or ‘free offer’ without reading all the fine print… then charges start appearing against your account.


The good news is, the Australian Payments Clearing Association’s banking practice codes place certain obligations on financial institutions.


If you ask your financial institution to stop, amend or cancel a direct debit card payment, or dispute a transaction, it must act on your request and must not simply direct you to the biller (although in some cases, service fees may apply, so contacting the biller may be worthwhile).


It must do so promptly and – in the case of cancellation requests – ensure as far as practicable, that no further direct debits are made.


When you dispute a direct debit payment, your financial institution must contact the biller’s financial institution. The biller must provide proof that you have given permission for money to be taken straight out of your account. Otherwise, a full refund must be made.

How to Cancel Scheduled Debit Payments


If you have arranged automatic recurring payment such as savings or rent, you may cancel them through online banking through a website or app. 


Just make sure that you complete the request at least one business day before the arranged payment schedule, so the next payment will not be pushed through during the transition.


What to Do About Unauthorised Debit Charges 


Direct debits that are made without your knowledge or permission could be illegal transactions. 


There are several reasons unauthorised direct debits happen, and not all of them are necessarily fraudulent. 


For example, some unauthorised charges are caused by human error. If a business that charged your card failed to properly cancel a direct debit after your request, that is unauthorised but could be easily rectified and so not illegal. 


Other unauthorised charges can be caused by technical errors. These types of mistakes happen, and you can still get a refund by following these steps: 


1. Call the company or biller


Get in touch with the biller so that they can properly make the changes. Usually, you just need to provide your account number, the details of the transactions that you believe are unauthorised, and other important information. Most complaints can be resolved at this step. But if the unauthorised charge was caused by sham activity from the biller, they don’t want to coordinate with you, or they keep on ignoring your calls, then you can proceed to the next steps. 

2. Call your card company 

If your biller failed to issue a refund, then call your card company. If the charge was processed after you have requested to cancel a direct debit or you are not aware of the charge, you can file for a chargeback and the card company can reverse the transaction after they have verified that it was unauthorised. The chargeback should include all fees or interest charges. If the account in question is a joint account, you may need to get a written authorisation from your partner. 


3. File a complaint with AFCA


If the card company still fails to issue a chargeback, you can formally file a complaint with the Australian Financial Complaints Authority (AFCA). Be sure to submit all proof of communication with your biller and the card company. 


What to do


Credit card direct debits rules can vary as they depend on the terms and conditions of your credit card contract, but the Financial Ombudsman Services recommends that you do the following.


  • Write to both the biller and your bank at the same time – cancelling your authority to debit your credit card account.
  • Check your next credit card statement carefully. If the transaction has been debited to your account, contact your bank and dispute the transaction. Do this straight away as credit card terms impose time limits on processing charge backs.
  • The bank will then start the charge back process if it is available to you.
  • Check subsequent statements as well and dispute any further transactions that appear.


Check also, to make sure that canceling the direct debit doesn’t leave you in breach of contract with the biller: see right.


Watch those “T & C”s


Often direct debits from a credit card are linked to a contract for goods or services which you have purchased.


As such it may be a term of the contract that you pay by direct debit. You could therefore be in breach of your contract if you cancel the arrangement. Make sure you check the terms and conditions, and if necessary seek professional advice with an advisor with an Australian credit licence. 


Note also that cancelling a regular payment arrangement may not relieve you of your obligations under your contract with your biller. Check the cancellation terms and again… if necessary seek professional advice.


What Are Your Thoughts?


Have you experienced unexpected direct debits against your account? Are your credit cards in control? Is there anything else you’d like to know about credit cards.

Join the conversation — leave a comment below and let us know what you’re thoughts are.

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