Many subscription services charge your card on a set date every month
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes “Your Business Credit,” a weekly column about small business and credit, for CreditCards.com.
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Dear Your Business Credit,
We’ve been dealing with a winery that likes to charge for its wine two to three
weeks before we can physically pick it up from the winery. What is the law on dealing with this kind of pre-charging of our credit card? I know
we could quit getting wine from the winery or cancel our membership, but the winery owner is a neighbor. We are not trying to be mean about this, but we are trying to keep him
from getting in trouble legally. Thanks for any advice you can give about this.
In your letter you mention you have a membership in the
winery, so I’m assuming you are part of a wine buying club. My assumption is
the winery is charging you on a set date for the shipment because there is a
rule saying that if you don’t make a pickup by a certain date, the winery will
ship the wine to you. Charging everyone on the same date is probably how the
winery keeps things organized.
Merchants may charge before shipping
It does not seem that the winery is breaking the law by
charging you in advance for the shipment. As my colleague Sally Herigstad
pointed out in her column, “Your
rights if a merchant charges you but delays shipping,” the Fair Credit
Billing Act and the Mail or Telephone Order Merchandise Rule say you don’t have
to pay for merchandise you don’t receive – but they don’t spell out when the
merchant can charge your card.
That said, many credit card issuers have their own rules on when
charges may be processed, so merchants should look at those rules for the cards
Regardless, it appears you don’t like the payment
arrangements and would prefer to be charged upon pickup. If you want to make a
change, I’d suggest first looking at your contract to see what you agreed
to, so you know where things stand. Then, ask if the winery offers other
options, such as making a small deposit and then paying the balance upon
Tip: Ask if you can make different arrangements for payment, such as making a small deposit and paying the balance upon pickup.
Best practices for recurring charges
Because many consumers don’t like being surprised by
recurring charges like this, even if they initially agreed to them, I’d
recommend that merchants overcommunicate about them.
As a best practice, Visa
recommends that merchants notify customers who have agreed to recurring
transactions that they will be charged at least 10 days in advance. The notice
should include the amount to be charged to the account and if relevant, alert
the cardholder if the transaction amount exceeds a pre-authorized range. Visa
notes that local law may impose specific requirements for this notification, so
it is possible there are other requirements the winery must follow.
business owners who want to make sure they are following local laws on this
front should start with the state attorney general’s office to find out
what rules apply, and ask if there are any city or county rules that also may apply.
It’s always best to be well-informed about your obligations
as a merchant. It can save you a lot of time dealing with frustrated customers
See related: 6 free tools to stop recurring card charges, Yes, merchants can get new card info on recurring charges
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