Perpetual Direct Debit?
April 12, 2010 9:45 PM Subscribe
13 months ago I signed a 12 month contract for martial arts tuition, for payment to be directly debited from my bank account fortnightly. About 6 months ago I moved cities, and hence was no longer able to continue with the lessons. Knowing that I signed a contract for 12 months I figured that I should honour it despite having no way of actually using the service I was paying for. The period of the contract I signed has now lapsed, and yet the money is still coming out of my account...
I contacted the school, who have advised me that they have changed billing companies, and that all clients have been automatically transferred to "perpetual agreements" (ie everlasting, never ending). They say that "all clients were advised by mail and email"- but I never received any notification of any kind. To get out of this eternal(!) contract I now have to pay a cancellation fee along with another month of tuition fees, or else get stuck paying for this service I will never be able to use again, forever.. but I certainly never agreed to these conditions, obviously... let alone signed a contract.
Does this seem right? Do I have any recourse, or am I going to have to wear these charges? Seems fraudulent, or at least highly dubious to me! What should I do, do you reckon?
By the way, this is in Australia, if it makes any difference.
Next stop, Department of Fair Trading, I guess.
I contacted the school, who have advised me that they have changed billing companies, and that all clients have been automatically transferred to "perpetual agreements" (ie everlasting, never ending). They say that "all clients were advised by mail and email"- but I never received any notification of any kind. To get out of this eternal(!) contract I now have to pay a cancellation fee along with another month of tuition fees, or else get stuck paying for this service I will never be able to use again, forever.. but I certainly never agreed to these conditions, obviously... let alone signed a contract.
Does this seem right? Do I have any recourse, or am I going to have to wear these charges? Seems fraudulent, or at least highly dubious to me! What should I do, do you reckon?
By the way, this is in Australia, if it makes any difference.
Next stop, Department of Fair Trading, I guess.
These guys have dealt with this kind of situation before and might be able to advise you on what recourse you have, if any.
posted by ignignokt at 9:57 PM on April 12, 2010 [1 favorite]
posted by ignignokt at 9:57 PM on April 12, 2010 [1 favorite]
Oh god, no. Don't worry about department of fair trading, dude. Dispute the charges w/ your credit card company; make them do the leg work. These chop-socky jokers don't have a leg to stand on.
Of course, it's not surprising that they continued to bill you - there's usually a provision in memberships like this that you can terminate after minimum term without charge, but sans notification, they will generally just keep billing.
So, step 1: dispute with credit card company. Step 2: fair trading (don't expect great results). Step 3: tell bank you've lost credit card, get a new one issued.
Too easy.
posted by smoke at 10:10 PM on April 12, 2010 [2 favorites]
Of course, it's not surprising that they continued to bill you - there's usually a provision in memberships like this that you can terminate after minimum term without charge, but sans notification, they will generally just keep billing.
So, step 1: dispute with credit card company. Step 2: fair trading (don't expect great results). Step 3: tell bank you've lost credit card, get a new one issued.
Too easy.
posted by smoke at 10:10 PM on April 12, 2010 [2 favorites]
Totally seems screwy.
If it were me, and I have no expertise in this area, but this is what I'd do, I would send a letter by registered mail (from a lawyer if you have a lawyer friend who will do it for free, but even from you with a formal tone if you can't afford a lawyer and don't have a friend) stating your request to a) not be charged again b) receive an immediate refund for the overcharge. I would clarify that I hadn't used the services for several months, but emphasize that regardless, the terms of the contract you agreed to were clear. Express your intent to both report them to any appropriate oversight organization (is there a Better Business Bureau type thing there?) and to take legal action if they don't take appropriate action immediately. Then, if they don't take immediate action, I would follow through by taking legal action.
Oh, and call your bank tomorrow morning to tell them you do not authorize any more withdraws from these jerks (which may actually be the most easy and effective solution).
posted by serazin at 10:16 PM on April 12, 2010 [1 favorite]
If it were me, and I have no expertise in this area, but this is what I'd do, I would send a letter by registered mail (from a lawyer if you have a lawyer friend who will do it for free, but even from you with a formal tone if you can't afford a lawyer and don't have a friend) stating your request to a) not be charged again b) receive an immediate refund for the overcharge. I would clarify that I hadn't used the services for several months, but emphasize that regardless, the terms of the contract you agreed to were clear. Express your intent to both report them to any appropriate oversight organization (is there a Better Business Bureau type thing there?) and to take legal action if they don't take appropriate action immediately. Then, if they don't take immediate action, I would follow through by taking legal action.
Oh, and call your bank tomorrow morning to tell them you do not authorize any more withdraws from these jerks (which may actually be the most easy and effective solution).
posted by serazin at 10:16 PM on April 12, 2010 [1 favorite]
You need to read the contract you signed originally. Did it automatically renew the term if no action was taken? Check this. I'm not your lawyer and I have no idea what Australian law says.
posted by Happydaz at 10:38 PM on April 12, 2010
posted by Happydaz at 10:38 PM on April 12, 2010
I wouldn't just stop payment, they will likely refer you to baycorp (debt collectors) and you'd then have to deal with them, especially if they don't have a forwarding address to send the late payment notices etc.
I am pretty sure you can't sign someone up for a new contract if they simply don't respond, but read your contract. Ask your local citizens advice bureau for help, if they can't help they will know where to go.
Otherwise try talking to someone else at the Dojo, sending a formal letter, or if the Dojo is a member of an umbrella organisation try complaining to them.
(This stuff can suck, I had to go to small claims court to get a debt from a similar situation removed)
posted by scodger at 11:07 PM on April 12, 2010 [1 favorite]
I am pretty sure you can't sign someone up for a new contract if they simply don't respond, but read your contract. Ask your local citizens advice bureau for help, if they can't help they will know where to go.
Otherwise try talking to someone else at the Dojo, sending a formal letter, or if the Dojo is a member of an umbrella organisation try complaining to them.
(This stuff can suck, I had to go to small claims court to get a debt from a similar situation removed)
posted by scodger at 11:07 PM on April 12, 2010 [1 favorite]
Smoke: there doesn't appear to be a credit card company involved. From the OP's description, it sounds like the withdrawal is being made directly from his bank account (bypassing Visa, MasterCard and other networks that could protect him in this case).
If that is the case, call your bank ASAP and de-authorize future withdrawals from this company, then take the appropriate steps to deal with the problem.
posted by halogen at 11:28 PM on April 12, 2010 [1 favorite]
If that is the case, call your bank ASAP and de-authorize future withdrawals from this company, then take the appropriate steps to deal with the problem.
posted by halogen at 11:28 PM on April 12, 2010 [1 favorite]
I'd look at the contract. It's possible that you were supposed to give 30 days notice in writing to cancel. That is, you may have signed up for at least 12 months. Like I did with the Columbia Record and Tape Club.
posted by ActingTheGoat at 11:32 PM on April 12, 2010
posted by ActingTheGoat at 11:32 PM on April 12, 2010
You're right halogen, though in Australia debit cards through visa etc are very popular. Either way, the easiest solution lies with the bank, rather than the dojo, or fair trading.
posted by smoke at 11:55 PM on April 12, 2010
posted by smoke at 11:55 PM on April 12, 2010
Did you read your contract?
It might have an automatic renewal clause unless you cancel.
posted by devnull at 1:20 AM on April 13, 2010
It might have an automatic renewal clause unless you cancel.
posted by devnull at 1:20 AM on April 13, 2010
If this is the kind of "direct debit" that is common in Australia, there are probably no credit or debit cards involved (as halogen says). The money is automatically transferred from one account to another, and the kinds of protections you have with a credit card or some kinds of debit card probably don't apply (this is why I have almost nothing direct debited).
Philby, there is simply not enough information to answer your question here. Your state or territory may have a free legal advice/legal aid service which can give you basic advice - here is a site that links to all of them. Have your contract at hand and give them a call.
posted by A Thousand Baited Hooks at 1:33 AM on April 13, 2010
Philby, there is simply not enough information to answer your question here. Your state or territory may have a free legal advice/legal aid service which can give you basic advice - here is a site that links to all of them. Have your contract at hand and give them a call.
posted by A Thousand Baited Hooks at 1:33 AM on April 13, 2010
Knowing that I signed a contract for 12 months I figured that I should honour it despite having no way of actually using the service I was paying for. The period of the contract I signed has now lapsed, and yet the money is still coming out of my account...
Incidentally, in the states, long term contracts like this (for gyms and so on) have provisions for moving where you have to show you no longer live at the original address and can't continue with the contract, it's possible things work similarly in Australia -- I'd be surprised if legally (or morally) you have any obligation to continue paying for a small service you're no longer using -- it's not like you bought a house.
Also, there's nothing like an actual letter sent with a bunch of people on the cc line. You send a copy to the manager, the owner, a newspaper (no time like the present to start being an old crank), your Australian equivalent of the Better Business Bureau and DAs office.
Every time we've done this we've gotten our problems resolved mighty quickly.
Makes you feel, as I said, like an old crank, but it's preferable to feel like an old crank who isn't paying eternally for unused martial arts classes.
posted by A Terrible Llama at 2:52 AM on April 13, 2010 [1 favorite]
Incidentally, in the states, long term contracts like this (for gyms and so on) have provisions for moving where you have to show you no longer live at the original address and can't continue with the contract, it's possible things work similarly in Australia -- I'd be surprised if legally (or morally) you have any obligation to continue paying for a small service you're no longer using -- it's not like you bought a house.
Also, there's nothing like an actual letter sent with a bunch of people on the cc line. You send a copy to the manager, the owner, a newspaper (no time like the present to start being an old crank), your Australian equivalent of the Better Business Bureau and DAs office.
Every time we've done this we've gotten our problems resolved mighty quickly.
Makes you feel, as I said, like an old crank, but it's preferable to feel like an old crank who isn't paying eternally for unused martial arts classes.
posted by A Terrible Llama at 2:52 AM on April 13, 2010 [1 favorite]
Response by poster: Thanks for all your answers, guys. I realise I might not have been as clear about some things as maybe I should have been.
The contract I signed was definitely for a fixed term. The contract that they've switched me over to is on completely different terms... and never ends, unless i cancel it and pay the fees they've decided on.. and I was switched over to it with no knowledge of it whatsoever.
The direct debit is from my savings account- the account my wage gets paid into, and that I use for most of my day to day needs. So there's no credit card company involved.
I reckon I might have to get in touch with the Dept of Fair Trading (the Australian equivalent of Better Business), and see what advice they have to give me. All sounds a bit screwy to me. These guys were always a bit shady if you ask me. Very much the money grubbing type while portraying themselves as all community oriented and family wholesome. Alas...
In the end I suspect I might just have to eat the fees. Oh well.
Once again, I'm dazzled by the helpfulness of askmefi. Definitely one of my favourite places on teh interwebs.. Thanks guys!
posted by Philby at 6:23 PM on April 13, 2010
The contract I signed was definitely for a fixed term. The contract that they've switched me over to is on completely different terms... and never ends, unless i cancel it and pay the fees they've decided on.. and I was switched over to it with no knowledge of it whatsoever.
The direct debit is from my savings account- the account my wage gets paid into, and that I use for most of my day to day needs. So there's no credit card company involved.
I reckon I might have to get in touch with the Dept of Fair Trading (the Australian equivalent of Better Business), and see what advice they have to give me. All sounds a bit screwy to me. These guys were always a bit shady if you ask me. Very much the money grubbing type while portraying themselves as all community oriented and family wholesome. Alas...
In the end I suspect I might just have to eat the fees. Oh well.
Once again, I'm dazzled by the helpfulness of askmefi. Definitely one of my favourite places on teh interwebs.. Thanks guys!
posted by Philby at 6:23 PM on April 13, 2010
No idea about AU law - but in most sane places - in small claims court or otherwise, especially when related to services where there is no big commitment/expense for the service provider - it would be awfully hard for them to justify continuing to charge you when you aren't even using the service any more and don't live there anymore, and have the signed limited-term contract to prove it.
Just dispute it with the bank, submit the original contract as evidence, and if they still don't back down, maybe whatever the equivalent of small claims court will get them to dance?
posted by TravellingDen at 7:15 PM on April 13, 2010
Just dispute it with the bank, submit the original contract as evidence, and if they still don't back down, maybe whatever the equivalent of small claims court will get them to dance?
posted by TravellingDen at 7:15 PM on April 13, 2010
Response by poster: Hey everybody
Just a little follow up here-
I ended up sending a strongly worded email (after typing it up a few times, then deciding to tone it down a little, etc... don't send emails when you're a bit mad! especially not business type emails!) to the guy in question, explaining my take on the matter and mentioning the Dept of Fair Trading. He was a bit pissy about it- after all, I was doing him out of a few hundred more of my hard won dollars!- but in the end he decided he'd best just let the matter drop, and cancelled me out of the contract without any of the penalty fees or anything else.
So, alls well that ends well, I guess. But in the future I'll be a lot more skeptical when it comes to signing contracts with those types of guys. It seems to me the only reason they'd get you to sign a contract in the first place is the potential for just such situations to arise.
Thanks everyone, for all your advice.
posted by Philby at 4:40 PM on April 14, 2010
Just a little follow up here-
I ended up sending a strongly worded email (after typing it up a few times, then deciding to tone it down a little, etc... don't send emails when you're a bit mad! especially not business type emails!) to the guy in question, explaining my take on the matter and mentioning the Dept of Fair Trading. He was a bit pissy about it- after all, I was doing him out of a few hundred more of my hard won dollars!- but in the end he decided he'd best just let the matter drop, and cancelled me out of the contract without any of the penalty fees or anything else.
So, alls well that ends well, I guess. But in the future I'll be a lot more skeptical when it comes to signing contracts with those types of guys. It seems to me the only reason they'd get you to sign a contract in the first place is the potential for just such situations to arise.
Thanks everyone, for all your advice.
posted by Philby at 4:40 PM on April 14, 2010
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posted by Billegible at 9:50 PM on April 12, 2010 [2 favorites]