Need to Stop a Payment? Know Who to Contact and How
It's easy to change your mind about a purchase or not realize that you have signed up for a service that will result in monthly charges. And while many merchants offer easy refunds or exchanges, sometimes you may need to stop or withhold payment. Here are several key facts to know when you want to stop a credit card, debit card, check or pre-arranged payment.
Withholding or reversing a payment on a credit card purchase: The Fair Credit Billing Act (FCBA) includes legal protections for problems with the quality of goods or services purchased with a credit card. Under that law, if the purchase totals $50 or more, the merchant is in your home state or within 100 miles of your home, and you made a good-faith effort to correct the problem with the merchant, you may withhold payment for defective goods or services while your credit card company investigates the matter. You also may withhold payment for defective goods or services under other circumstances, such as if the merchant is also your card issuer, regardless of the cost or geographic location.
However, you are still responsible for paying any other charges on your account that are not related to the disputed amount, and for promptly notifying the card issuer of the problem. If you cannot resolve the matter with your card issuer, you can contact the institution's state or federal regulator for assistance and guidance. To find out who regulates a financial institution, you can call or e-mail the FDIC (see our contact information).
The FCBA also provides protections if you've already paid your credit card bill but you later are dissatisfied with a purchase. First contact the merchant to request a refund. If it refuses, you may file a complaint with your credit card issuer. The card issuer may provide a refund to your account if it agrees with your complaint.
Also review the benefits of your card to see if it provides further purchase protections. "Those could include extended warranty coverage for products purchased or even coverage against certain types of damage for a set time period after purchase," explained Luke W. Reynolds, Acting Associate Director in the FDIC's Division of Depositor and Consumer Protection.
Stopping or reversing a debit card payment: A debit card deducts payments electronically from a checking or savings account. Unlike credit cards, debit cards are not covered by federal legal protections for damaged goods or faulty service. However, your bank or the merchant may still offer help.
Contact your financial institution to ask if there is time to stop the deduction of funds from your account or if there is anything else that can be done. But given the speed of debit card transactions, you probably will need to resolve the matter with the merchant or pursue other legal remedies.
Because federal consumer protections are stronger for credit cards than for debit cards in certain circumstances relating to disputes with stores or other merchants, "you might consider using a credit card if you're concerned that your purchase might not go smoothly," said Heather St. Germain, an FDIC Consumer Affairs Specialist. Keep in mind that you may have to pay interest if you use a credit card and don't pay the bill in full.
Also note that while protections for defective goods or services purchased with a debit card are limited, the Electronic Fund Transfer Act (EFTA) provides safeguards against billing errors and unauthorized transactions on your debit card account.
Stopping a check: Your bank must receive and process your request before the funds are removed from your account and that window of opportunity has gotten shorter in recent years. Once a check has been paid, it's up to you to try and get your money back from the person or merchant who cashed the check. Also remember that your bank may charge a fee, typically ranging from $20 to $35, to stop a check.
If you orally request a stop payment, follow up in writing. Under the law in most states, an oral request to stop payment on a check expires after 14 days, but a written request is good for up to six months.
Stopping an automatic, recurring payment: If you have regular, automatic deductions from your checking account (to pay for expenses such as insurance premiums or utility bills), the EFTA allows you to stop those payments. First, notify the vendor. Next, tell your bank about your request at least three business days before the money is scheduled to be transferred. Your notice to the bank may be oral, but the institution may require you to provide a written follow-up within 14 days to ensure that no additional payments are made. If you fail to provide a written follow-up, the bank is no longer responsible for stopping future payments.
Stopping an automatic, recurring payment on a credit card is different. Start by putting in your request with the vendor. But if the vendor continues to charge your credit card, contact your card issuer. You'll have 60 days to dispute the charge, starting when the card issuer sends you the statement with the charges.
"Any time you need to stop a recurring payment from your checking or credit card account, it's a good idea to put your requests to the vendor and to the financial institution in writing, so that you have a record of it in case of a dispute," explained St. Germain.
Also, even though your financial institution may stop some payments, you may still be legally obligated for other payments depending on your contract with the service provider. For example, if you sign a contract to receive and pay for certain services for 12 months, and you cancel before the end of the agreement, you may still owe the entire amount.
If you have questions or concerns about stopping a payment, first contact your financial institution. For additional guidance, you can call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342) or send an e-mail to www2.fdic.gov/starsmail.