
My Evil Undead Credit Card - ryangilbert
http://uncrunched.com/2012/08/26/my-undead-credit-card/
======
ben1040
Back in 2000 my wallet, including my Visa check card and other credit cards,
was stolen in Paris. I called the bank right away, got cards canceled, had new
ones ordered and all that.

I get my checking account statement and see several charges that the thief
made before I was able to get the card canceled. My bank cheerfully reversed
those and I thought nothing of it.

Four months later, I see a charge on my statement from one of the same
merchants as before. I called my bank, and they said that the merchant had
authorized my card, but did not proceed to capture the payment until then. I
asked why this happened on a canceled card, and was told the authorization
happened before the card was reported stolen so they had to honor it. They
told me the merchant had six months to capture the payment, and it basically
was as if I had written them a check and they sat on it for months.

Clearly the thief had some buddy with a merchant account, and they were trying
to see if they could sneak a charge in later without me noticing it.

I asked my bank if there was a way for them to see if there were more of these
charges in the pipeline, because I had written some checks and it would be
highly inconvenient to me if they bounced. They said they had no way of
knowing. The only way to stop these from going through was to close the
checking account, which would also mean the checks I've written were going to
bounce anyway. So I just had to wait out two more months and hope nothing more
happened.

Luckily, that was the only instance.

~~~
encoderer
One of the several reasons Debit cards are much worse and anti-consumer than
Credit cards.

People think that because it has a Visa logo and their bank has a limited
fraud liability policy that they're safe. That their debit cards have the same
consumer protections as credit cards. That's just not the case.

Moreover, if you swipe-and-sign for _anything_ you should be getting rewards
or cash-back. Very few debit cards offer rewards, and the ones that do are
often less lucrative than those offered on credit cards.

~~~
soult
I don't know how debit cards work in the US, but I need a PIN to use my debit
card, so short of being forced to withdraw money at gunpoint, you won't get
any access to my bank account.

~~~
PakG1
I had a co-worker once who used his debit card at an ATM at a coffee shop
nearby our office. Somehow, some genius had installed a mechanism in the ATM
to read the stripe and the PIN. So they were able to take that info and create
a fake debit card that replicated my co-worker's debit card. The next week,
his bank account got cleaned out. He was absolutely broke and went through a
few weeks of hell trying to get it all sorted out. Fortunately, the bank was
able to help him out. I don't know what happened with the police
investigation, but basically none of us used cards at that coffee shop again.
The coffee shop was still operational, and I think the police were somehow
able to determine that it wasn't the coffee shop at fault (maybe only a single
employee or an ATM maintenance guy, not sure).

I think this is why a lot of debit cards have chips nowadays. The chips are
harder to counterfeit (I think). But I think we still have to grandfather all
the old debit cards without chips. :(

~~~
megablast
Wow, I thought everybody had heard of ATM card skinners by now. Be very
careful at any ATM you use, don't think you are safe because you avoid that
cafe's. And cover your hand when you enter a pin.

~~~
PakG1
That was in 2010, hadn't heard of them back then. Not sure if they were
actually common back then, although I'm sure they're certainly more common
now. Yes, careful, careful. :(

------
ghshephard
This makes sense somewhat - if you could get out of a contract with a
merchant, simply by canceling your credit card, then why bother to uphold your
obligations (multiple payments, length of relationship) etc... Just get
whatever benefits you want, then cancel the card and wave goodbye to the
merchant. That would be _particularly_ problematic on a multiple-payment
scenario.

The net-net is _never_ give your credit card to anyone who suggests they will
charge you, unless you have full control over that relationship.

It's the key reason why I subscribe to all my magazines and newspapers (key
exception being the WSJ) through iTunes - single place to control
subscriptions - with the added bonus that I get reminded every month that
there will be a renewal coming up.

I also negotiated with my Gym to allow me to pay the full year up front +
initiation fee to avoid having to give them my credit card - It was amazing
how difficult it was for me to convince them to allow me to give them $410 up
front for a $30/month gym membership. They really make a lot of money off of
people who don't want to come into the gym and cancel, or forget to do so on
their "Annual" anniversary when they get signed up for another year.

Most of us are in our early 20s when we discover the downsides of recurring
credit card charges - I'm surprised that someone as savvy as Arrington is
discovering that he can't just cancel his account to end those recurring
charges - I thought it was something that students usually do and discover
doesn't work. I certainly did when I was a student.

~~~
dclowd9901
No, if you have purchases on your agreement prior to cancellation, it's
obvious that you are beholden to these purchases. These are within contractual
guidelines _and_ sensible.

If a merchant tries to charge my card, and finds that they cannot, they can
end their relationship with me, and if, for some reason, cannot reconcile
outstanding costs through traditional means, can utilize collections agencies
or any other means they wish to obtain their due.

This is not only nonsensical, but legally questionable at best, and I'm very
surprised this is the first I've seen anyone bring a point against it.

~~~
ghshephard
My gym offers a membership - $30/month with credit card and a one year term,
no initiation fee, or $50/month, $75 initiation fee on a month-by-month basis.
When I sign up for the one year membership, I put my signature on a contract,
indicating that I will oblige by all the conditions.

Should I be allowed to sign up for the one year term, and then cancel my
credit card after a couple months?

Whenever you enter a contract, there are conditions that must be fulfilled to
cancel that contract. Simply saying "I didn't read those conditions" or "I
don't want the product anymore" is not a sufficient condition to terminate the
contract. And thinking that you can get out of it by "canceling the credit
card" is naive in my opinion.

~~~
brk
_Should I be allowed to sign up for the one year term, and then cancel my
credit card after a couple months?_

Yes, you should. Because it's not the credit card companies responsibility to
worry about what outstanding contracts you may or may not still have ongoing.

It would be up to the merchant to pursue legal action if your attempt to
defraud the contract was substantial enough for them to care. If this was an
ongoing problem for them, they would have to debate if their "deal" is really
valued by their consumers and worth continuing to offer.

But, it's not Visa's problem to worry about these things.

------
jrockway
Doesn't everyone know this? You can't enter into a contract with someone and
then just pull the payment instrument out from under them. Even if they
stopped charging your credit card, they could still sue you for the amount you
owe them.

You have to cancel your gym membership if you don't want it anymore. Send them
a registered letter and CC the state's Attorney General office if they won't
cancel the account for you.

Edit: Wow, I just realized this is Arrington's blog. Isn't he a lawyer? How
can he not know this stuff?

~~~
dangrossman
"Sending a registered letter" sounds like a "getting ready to sue" legal last
resort. You don't have to do things like that to cancel subscriptions with
most any other business.

Unfortunately that's actually the _only_ way to cancel membership in writing
at most major gym chains in the US. They all outsource membership billing to
the same company, ABC Financial. ABC has their customers (the gyms) require
member cancellations be sent by certified mail. Any cancellation request by
phone or mail that isn't sent certified is simply thrown out. If you cancel
your credit card, they'll just send you immediately to their collections
agency.

This is how they guarantee "more revenue from more members than with anyone
else". It's such a scummy business.

<http://www.abcfinancial.com/>

A Google search for "ABC Financial scam" (in quotes, exact phrase) has over
13,000 results.

~~~
ghshephard
I've had five gym memberships in my life. Every one of them allowed me to
cancel the membership by coming into the gym and canceling it. In every case,
that method, "Come into the gym and cancel" was written write on the contract.

If you are willing to negotiate with the owner/manager, they might even allow
you to pay the full year up front - because that's basically the same thing
(this was my argument) as signing up for a 1 year membership, and then
canceling it the very same day - you are still responsible for the full 12
months, but it would end after one year because you had "cancelled" it.

Can you name a gym that won't let you cancel your membership by coming into
the gym and doing so?

~~~
dangrossman
Ballys Fitness, Blast Fitness, Anytime Fitness and Gold's Gym according to
just a few of the 90 reports on RipoffReport. I didn't just pull names out of
titles, I read the reports and these are people that said they went to their
gym to cancel, but kept getting billed by ABC.

<http://www.ripoffreport.com/directory/ABC-financial.aspx>

~~~
ghshephard
I didn't read all of them, but the first, "Golds" caught my attention:

== SNIP ==

"I am currently on the phone (and have been for an hour) with ABC Financial,
the company that handles billing for Large Gym chains Golds Gym, Lifequest
Fitness (I'm sure there are others).

I've been trying to cancel my membership. I've been put on hold 4 times." ==
SNIP ==

I've never had a gym membership that, by default, could be canceled via
letter/fax/phone call. They all say the same thing, "Come in to the gym in
person, and cancel the membership."

Most of them also have a clause saying that you are renewed for a year if you
don't cancel on your anniversary.

I always add a half dozen riders (and have the manager sign it) that says
things like "If I get a job or move more than 25 miles away from the gym, I
can send in a letter stating that, and cancel via registered mail." - Gym
managers are usually reasonable, and will let you do that. Take 15 to 20
minutes to negotiate your Gym contract - you do realize it's a contract,
right?

In 90% of these cases, people just aren't demonstrating personal
responsibility for the contracts they've entered.

I'll say it again - never, ever, ever enter a recurring contract (or something
that might _be_ a recurring contract) with your credit card, unless you have
100% control over the cancelation and terms.

~~~
tedunangst
My experience with Gold's Gym is you call the number (for ABC Financial) and
they tell you to mail a letter to them. They were very friendly, no hold time,
but couldn't (wouldn't?) cancel over the phone. I got the phone number from
trying to cancel in person at the gym. The people working the desk didn't
appear to be getting paid enough to care too much (on the bright side, they
didn't try to sell my anything I didn't want when I signed up. They told me
$30 a month, take it or leave it).

Overall, I had to mail a letter and pay for an extra month's membership (and a
stamp), but it wasn't that bad. Supposedly my contract required 60 days
notice, I didn't care enough to check. People get burned up about these
things, I figure there's more important things in life than $30 for a gym
membership I didn't use.

------
cletus
It is interesting that charges can be put through after a card is cancelled.
I, for one, did not know that.

I've cancelled cards previously because merchants were unreasonable or
unresponsive. Gyms are one of the worst for this. Cancelling a gym membership
is an exercise in torture.

Anecdote: I was in an Equinox gym a couple of months ago, thinking about
joining. I saw a "representative" who was happy to give a tour through the gym
and explain the costs and benefits. For these sorts of things however I give a
fake phone number because I loathe the follow-up calls from such places.

Anyway, at one point while standing around reception where there were 5 or so
such representatives standing around the receptionist answered the phone.
Someone was inquiring about closing their account. She said they had to speak
to a specialist and none were available. What the...? No one else seemed to be
with a customer. It just struck me as another tactic to make it more difficult
to cancel.

Now for me this would be relatively easy. My company has a corporate
membership so it can be deducted directly from payroll and when I say for it
to stop, it stops. But honestly I can't condone these hard sell tactics by
giving such companies my money.

Cancelling a gym membership should be as simple as a 2 minute phone call or
(better yet) clicking a button on a Website (Equinox has a Website where you
can reserve exercise bikes no less).

My only experience with dispute resolution was reasonably painful although not
as bad as it could be. I ordered something online and the merchant called me
to say that price was only when I bought it as part of a package. I said I
didn't want it. He said fine. A week later it turned up anyway. I had the
charge reversed. They applied it again. I had it reversed (again). I had to
send the item back by registered post.

I think the lesson to take from gym memberships and similar fixed-fee for
shared usage pricing models is that they create the wrong incentives. Gyms
really want customers who pay every month but never come in so they can
oversell their capacity. If gyms were pay-for-use you simply wouldn't have
this problem. Likewise you could discount memberships for people who come in
at non-peak times, etc.

Some point out the "you signed a contract" argument and agreed to those terms.
To this I response: people have an innate sense of fairness. People will
(rightly IMHO) reject unreasonable terms. If I don't pay my gym membership, I
can no longer go to the gym. This isn't like failing to make a car payment.

Unfortunately consumers seem to like monthly fees so you kind of get what you
ask for.

~~~
egypturnash
I suspect the economics of gyms might be such that if it was pay-per-use
they'd either have to charge insane rates or go under. It's not so much that
consumers like monthly fees as that the gyms like them because they're easy to
forget about.

~~~
ams6110
Most gyms charge attractively low fees because they are typically a year or
more contract, with an auto-renew clause, and they know that the vast majority
of the members will use the gym a few times and then stop coming. If all their
members used the gym regularly, they'd be packed to overflowing.

There are gyms that charge per use, the fees may appear higher but if your
dedication to exercise doesn't turn out the way you planned you will be money
ahead.

For the best chance at getting a payment plan that doesn't count on you having
low motivation to exercise, look for locally-owned independent gyms, avoid the
Bally's and other franchise/chain operations.

~~~
forensic
>look for locally-owned independent gyms

This isn't good advice. The locally owned ones are often even more desperate
and willing to go the extra mile to defraud you. The idea that small
businesses are more honest than big ones is a complete myth. Most of the time
it is the reverse: big corporations have more to lose.

~~~
masterzora
Unfortunately, as much as I hate the middle ground fallacy, it is correct
here. It's far too broad to say that locally owned ones are more likely to
defraud you or less likely. The real truth about locally-owned establishments
is that with big corporations you know exactly what you are getting because it
is the same everywhere whereas individual local establishments will depend on
who the owner is. If the owner is desperate and willing to do everything to
defraud you, so will be the establishment. If the owner is the nicest person
in the world they'll be perfectly happy running a business in the red for as
long as they can avoid total financial ruin so that they can better serve
their customers. And, of course, you'll get everything in between.

The advice to go local is less about it being a guaranteed win and more about
it being how you find those who will go above and beyond everything.

~~~
forensic
Your description is accurate but the advice to go local is usually not given
that way, it's usually given as a slogan.

I've actually never heard anyone say "The advice to go local is less about it
being a guaranteed win and more about it being how you find those who will go
above and beyond everything."

Instead I always hear a dogmatic something like "support local business! Big
corporations are evil!" When I've actually been defrauded out of FAR FAR FAR
FAR more money by buying local.

------
charlieok
The basic affordances underlying credit cards are backward: “Here's my wallet
-- go ahead and take what you think you need.”

Carrying a computer (i.e. phone) running a user agent can vastly improve the
interaction. Something like:

1\. Transmit an identifier from user agent to merchant via radio, barcode, or
some other method.

2\. Merchant's system asks user agent (either directly or through a service
such as the user's bank) for a dollar amount.

3\. User agent asks the user: "do you accept this charge? yes/no"

At no point is the merchant given a piece of information that allows them to
charge whatever amount they want. The transaction isn't complete before the
user approves the amount on their own device.

It's kind of amazing we haven't switched to something along these lines
already.

~~~
Evbn
Every month, your card company sends you a list of charges. If any of them are
illegitimate, you tell the company, and don't pay, and they investigate.
That's basically the same as your proposal. Your credit card number is like a
public key, if you will. Checks are worse. They pay out immediately without
asking for approval.

~~~
charlieok
No, it isn't the same. I don't want to wait until the end of the month. The
information about this transaction is freshest in my mind at the exact hour
and minute I enter into it.

I want a notification on my phone immediately:

"(Merchant X) requests a payment of ($Y). Do you accept this charge? ( ) yes (
) no [ ] Auto-apply this answer to future requests from this merchant"

The notion that I shoudn't, by default, have a role in approving each and
every transaction before it goes through is a holdover from the days when I
didn't have an always-connected computer in my pocket.

If I never approve it in the first place, there's no wrong that needs to be
righted, no fraud that needs to be investigated. I just got some spam asking
for money. I marked it as spam to keep from being flooded in the future by the
same spammer, and that's it.

------
phn
I don't know where this is from. But in Portugal, I really feel blessed by the
MBNet service that exists here. Basically you tie it to any card
(credit/debit) and generate temporary credit card numbers with a hard value
limit defined at the time of creation. Want to buy a 10$ game, generate a card
with a slightly larger value and pay with it. If the merchant tries to take
more, it is denied and the card automatically cancelled.

I am amazed this doesn't exist elsewhere (if it does I have never heard of
it). Even banks themselves could provide something like this.

EDIT: I don't know how it actually works if you want to pay by credit. I
generally generate cards with values that my bank account can cover.

~~~
X-Istence
Bank of America, my credit card provider provides the same sort of service.
They call it ShopSafe. You generate a temporary credit card number with a
certain limit and you can set when it expires.

It is fantastic for purchasing goods from web sites that may not secure their
card data completely, or if you are worried about fraud on the internet. I've
also in the past generated the numbers for when I need to pay over the phone
and don't want to hand out my credit card number!

Extremely handy, unfortunately it seems that not enough people make use of it,
to the point that BoA employees in the fraud department are at times not even
aware that the feature exists...

~~~
chimeracoder
Are there fees attached to this?

I'd be interested in using this, but I get so frustrated with Bank of
America's fees. They want to charge $10/month just for using OFX to access
your own financial transactions!

Given the level of security that most banks implement, this is completely
indefensible in my books (given that the same information is available through
the shoddy web interface).

~~~
X-Istence
My bank of america card is completely free of monthly fees, and I have
Mint.com pull my financial transactions without issues.

ShopSafe is also completely free to use.

~~~
chimeracoder
Whether or not you have a fee for your card itself depends on what card you
get; I'm not referring to those kinds of fees.

As for the second point, Mint/Intuit probably covers those fees for their own
service, but they don't allow you to interface with them over OFX, so it's a
moot point for anyone who wants that information for something other than
Mint.

------
aneth4
Is anyone surprised that Michael Arrington has soured relations with a vendor
enough that they'd refuse to talk to him? Not I.

The dispute resolution process deals with these sorts of things and punishes
merchants who repeatedly violate rules. Strategy number one is to not be a
dick. People respond better that way and you won't end up in the situations
Michael Arrington always seems to end up in.

I probably deal with as many merchants and as much travel as him and have
always resolved such issues amicably.

------
bencoder
Had a friend who cancelled an old mobile phone contract. He kept the old phone
and sim in a drawer somewhere.

House got broken into and the old phone was stolen but my friend didn't notice
the missing phone since it wasn't used anymore. Thief managed to call up the
phone company and get the contract re-instated. Friend received bills for
thousands.

Cut up your old sim cards.

------
rdl
My solution to this is to use an American Express card. Every single time I've
had a problem, domestic or international, they've been on my side, and
disputes are easy to handle. (the correct Amex cards to have are Starwood
Preferred Guest for USA use and Platinum for international or status (lounge
access, etc.) use.)

~~~
learc83
Interestingly the one time I had a chargeback dispute with an Amex customer--
even though I won the dispute (I had clear evidence--video, signatures
etc...)--Amex still credited both my account and the customer's for the full
amount.

~~~
rdl
Amex is the Apple of the payment world -- they control and brand the whole
thing end to end, and own the high end, charging a slight premium for some
things when the market will bear it (and were both far larger premiums and
lower volumes in the past).

With Visa/MC, it's a card association (until recently, a non-profit), and an
issuing bank. The issuing bank may have a bunch of banking relationships with
you (so you're unlikely to walk over a credit card), or only a credit card (so
you're not that valuable to them anyway), and doesn't have as much incentive
to protect the card association brand. End user consumers almost never contact
the card association itself.

------
ams6110
To play devil's advocate, you should not be able to just close your credit
card account and be able to walk away from a contractual recurring payment
agreement into which you entered.

~~~
gmrple
But is it the bank's responsibility to enforce the contract?

I would rather have a civil court be the recourse for a broken contract than
for a third non-governmental party to handle it.

I suppose if it was written into the contract that the bank would perform this
role prior to the card being obtained and this being made abundantly clear to
both sides things would be a little different. Still, ideally I would have the
bank as the holder and mover of funds at the will of the cardholder, not
someone outside of the contract between the bank and cardholder.

~~~
euroclydon
Oops, meant to upvote you. I agree. I guess when you agree to use credit cards
you're not just using a payment instrument the bank has made for your
convenience, but choosing to use a system which the banks find lucrative and
the merchant exert a good deal of control over. Consumers are not as
politically proactive as merchants so we can't be surprised to find the laws
favor the merchants.

[edit] Someone upstream mentioned authorizations. I'd like to know more about
how authorizations work with subscriptions. Do they keep a rolling six month
queue of auths or is there a seperate and unique structure for recurring
payments?

~~~
chimeracoder
> so we can't be surprised to find the laws favor the merchants.

The contracts that merchants enter with credit card companies are _very much
not_ in the merchants' favor.

That may not always translate into being in the customer's favor (as opposed
to the banks'), but merchants are certainly not the ones winning in this
setup.

------
mmcnickle
Thankfully in the UK, Direct Debits[1] are used for most recurring payments
and have a lot of protections in place, namely:

1\. The payer has the right to cancel the direct debit at any time.

2\. The payee cannot alter the date or the amount of the payment without prior
notification/authorisation.

3\. The bank has no ability to alter the payment instruction after it has been
authorised.

4\. There is a guarantee in place to return funds in case of a dispute. The
bank will process an immediate refund, and it is up to the payee to chase
payment. The banks play no part in the dispute resolution process.

------
adient
I'm not sure why the author is so afraid of the chargeback process. If you
request a merchant to stop charging you and they refuse or don't acknowledge
you, your credit card company will contact the merchant on your behalf to
cancel the relationship or block future transactions. It only takes a few
minutes to submit the request.

------
awfabian2
Just never give authorization for recurring billing. I use my credit card for
one-time payments for monthly services all of the time, and I never authorize
recurring billing. When you do that, you establish an on-going relationship
with the merchant that isn't so easy to cancel. But you can cancel their
authorization to do recurring billing in writing, and then any charge made on
that ground should be refunded to you as a simple matter of course.

It generally works out pretty well if you just never authorize automatic
recurring billing.

------
pappabetalar
Hmm I have a Visa connected directly to my bank account, (debit?) So far so
good, but i also have an app on my phone (Android) from my bank
(Handelsbanken) that lets me check/transfer money from my accounts. But i can
also LOCK my Visa from being used outside of Sweden and on the internet. So
every time i want to buy something on the internet or going to another country
i open the app open my card for internet/international use and tada.

This service is free and i can Unlock/lock my card as much as i want too.

------
zampano
Why not just call the gym in question? I've had numerous accounts with
recurring charges, but I've never dealt with them by changing account or card
numbers.

~~~
redslazer
Have you ever attempted to cancel a Gym membership? It is near impossible.

~~~
adient
Why? I've had to switch between a few different gym companies over the years
and never had any trouble.

------
efa
I noticed this a few months back. I had cancelled an Amex card and get a new
one (brand new number). My old one was saved in my Amazon profile. I charged
to that old account a couple times before I realized that that was the card I
cancelled. But it worked fine. To this day I can still pick that card when
checking out of Amazon with no issue.

------
ericb
I closed an account, and moved. Had this happen, go to collections, damage my
credit, and had no idea.

