The Risks of Automatic Bill Paying: How to Avoid Online Money Traps

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Common Automatic Debit Risks

Danger: The amounts taken out are not the amounts you agreed to. Owing to a clerical error, you could be billed twice in one month, for instance, or you could have been deliberately overcharged. No matter how it happens, you can wind up paying too much.
Your Best Defense: Don't be complacent. "It's important to compare your bank and credit card statements with your bills," says Gail Hillebrand, senior attorney with Consumers Union, publisher of Consumer Reports, in Yonkers, New York. "On your billing statement, by law, the creditor must tell you ahead of time when the debits will go through so you can call if there's an error." If the problem is with a credit card, you can contest that charge, too. Also, examine your statements carefully to be sure you're not being billed twice.

Danger: Many free trial offers ask you to input a credit card number so the company can start billing you when the free trial ends. But often the onus is on you to cancel the service.
Your Best Defense: Companies bank on your simply letting the cancellation deadline slide. Read the fine print carefully and mark on a calendar when the trial period ends. If you don't want to continue the service, cancel it in writing. Consider sending your letter return receipt requested so you have proof that your request arrived. Follow up by phone.

Danger: Charges from services that regularly billed a card keep arriving after you cancel the card. Depending on your contract, the credit card issuer may continue to accept charges and bill you in return even though an account has been closed. Even if your card denies the charge, the biller might try exacting penalties or extra interest.
Your Best Defense: Don't rely on the credit card company to do your legwork. If you cancel a card, notify businesses that automatically bill that account and give them an alternate credit card number (check your last statement if you can't remember which companies bill the account you want to terminate). Likewise, when a card expires, provide billing companies with the new information.

Danger: If you cancel a service, such as cable TV, the bills may continue, whether it's an innocent slipup or a merchant's attempt to squeeze a few more payments out of you.
Your Best Defense: Don't assume charges will stop automatically. If you cancel a service, keep tabs on your accounts so you'll know if debits continue. Notify the billing company if there is an error.

Continued on page 3:  Know Your Rights


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