Are you being charged for something you didn't order or don't want?
The Cost of "Phantom" Bills
by Gary Foreman
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It started in the 1990s. You could set up a recurring bill to be automatically paid by your bank. Writing checks and mailing bills was no longer necessary. It's as easy as can be. It's not surprising that around 2000 automatic bill payment gained popularity quickly. And the introduction of smart phones only accelerated the trend.
But, along with the convenience, there's a downside. Most of us don't pay much attention to bills that are paid automatically, which makes it easier for companies to increase their monthly rate or to charge us for things that we don't want or need.
To help us understand how big a problem unwanted automatic charges are we spoke with Yahya Mokhtarzada , Founder and CEO of TrueBill.com.
Q: Everyone loves the convenience of having a recurring bill charged to their credit card. Are there any statistics as to how many charges the typical consumer has charged automatically?
Mr. Mokhtarzada: We've actually seen this number increase quite a bit over the last two years from 5.5 per person to over 11. Consumers are getting increasingly comfortable with recurring billing and are signing up for more and more subscription services.
Q: Are we talking about a lot of dollars here? Or is it a fairly small part of the average person's budget?
Mr. Mokhtarzada: We're seeing the average Truebill user spend over $350 per month on subscription payments, and that's including bills like insurance, utilities/phone, recurring charitable donations, etc.
Q: Naturally we all claim to read our monthly statements carefully, but I'm guessing that many of us are just too busy. Is there any data on how many statements we get and how much time we spend on them?
Mr. Mokhtarzada : Unfortunately I don't have data around this. I can tell you that 16% of people that sign up immediately cancel a subscription. That amounts to a whole lot of people paying for subscriptions they either don't want or didn't know about.
Q: Wouldn't it be easy for a company to increase the amount they charge or add an additional service without the customer knowing?
Mr. Mokhtarzada: Absolutely! Some companies are notorious for introducing unannounced rate hikes. Cable companies like Comcast are the biggest culprit here, but phone companies are guilty as well. Interestingly enough, they'll usually lower your rate back to the original amount (and in many cases even offer you a further discount) if you catch them on this. Truebill provides subscription monitoring to alert you if your rate goes up.
Q: Besides comparing the dollar amount each month, are there any other tip-offs that you're being charged for something you don't want?
Mr. Mokhtarzada: This is a difficult one because there really is no easy way to identify unwanted charges, especially unscrupulous ones. I suppose one could print out their last few months of credit card statements and go through each line-by-line with a red highlighter and then look for recurring items among the highlighted rows, but this is a pretty painful way of doing it.
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Q: When you find that you're being incorrectly charged, what's the best way to get it to stop?
Mr. Mokhtarzada: First, check your bank or credit card statement and figure out if the charge in question was a one-time occurrence or if it occurred multiple times. Most online banking tools have "search" functionality, so it should be easy to identify how many times you've been charged.
Next, reach out to the charge in question to let them know that the charges on your account are unwanted (you may need to Google the charge-name to figure out what company it's actually connected to). Give them a record of the dates and amounts charged and tell them that not only are they not authorized to charge you going forward, but that you'd like a refund for the previous transactions as well. Doing this on the phone is usually the best method, but companies often only provide support via email or online form.
Also, it's important to know that you are not powerless here. Let them know that if they don't reverse the charges, you'll be contacting your bank or credit card to request a chargeback. Businesses get heavily penalized for chargebacks and will do almost anything to avoid them.
Finally, confirm that they've refunded the payment. If they either refuse or fail to do so, contact your credit card and tell them you have an unauthorized charge on your account and you'd like it credited back to your account. Remember that your bank works for you and they specifically have insurance for this, so don't feel shy about standing your ground here.
Reviewed April 2017
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step:
- Check your credit card statements or visit TrueBill.com.
- Don't forget to do a financial check-up. Find out how to do it here.
- You don't want to miss these 10 ways to prevent non-essential spending.
- Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!
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