An automatic Debit Payment is when you allow a merchant (the business providing the goods or services to you) to debit (take money from) your (credit card,cheque or savings account) account on a regular basis to pay for goods and services.
You can cancel an Automatic Debit Payment whenever you want. You do not need a reason. To cancel a Automatic Debit Payment you must write a letter to the merchant and send a copy of that letter to your bank or credit union.
Federal law provides certain protections for recurring automatic payments. You have the right to stop a company from taking automatic payments from your bank account, even if you previously allowed the payments. For example, you may decide to cancel your membership or service with the company, or you might decide to pay a different way.
You will need to notify your bank at least three business days before the scheduled date of the transfer and inform it that you wish to stop payment. You can provide the notice orally, but the bank will require you to confirm the request in writing. The bank will provide you the address where the confirmation should be sent. The oral request ceases to be effective after 14 days if the bank requests a written confirmation and the written notice is not received.
If you decide you want to stop automatic debit payments from your account:
If you have revoked authorization and the merchant continues to charge the account, you can dispute the transactions with the bank. Write a letter of complaint to your bank or credit union immediately (preferably before the due date for payment or 30 days from the date of the statement). If you wait longer, you could have to pay the full amount of any transactions that occurred after the 30-day period and before you notify your bank. In order to hold you responsible for those transactions, your bank would have to show that if you notified them before the end of the 30-day period, the transactions would not have occurred.
In extenuating circumstances, like lengthy travel or hospitalization that keeps you from notifying the bank within the time allowed, the notification periods above must be extended.
If the debit is unauthorized, (that is, made after you had cancelled the Automatic Debit Payment Authority), then you should ask that any amounts debited after the cancellation be credited to your account (paid back) along with any fees or interest that should not have been charged. Click here for sample letter
Once you notify your bank or credit union, it generally has ten business days to investigate the issue (20 business days if the account has been open less than 30 days). The bank or credit union must correct an error within one business day after determining that an error has occurred. Your bank or credit union then has three business days to report its findings to you.
If the bank or credit union can’t complete its investigation within ten (or 20) business days as applicable, it must generally issue a temporary credit to your account for the amount of the disputed transaction, minus a maximum of $50, while it continues to investigate.
In certain circumstances, however, it does not have to issue a temporary credit. For example, the bank or credit union may require you to provide written confirmation of the error if you initially provided the information by telephone. If you are asked to follow up in writing and you do not do so within ten business days, the bank or credit union is not required to temporarily credit your account during the course of its investigation.
The bank or credit union must then resolve the issue in 45 days, unless the disputed transactions were conducted in a foreign country, were conducted within 30 days of account opening, or were debit card point-of-sale purchases. In those cases, you may have to wait as long as 90 days for the issue to be fully resolved.
If the bank or credit union determines that the transactions were in fact authorized, it must provide you with written notice before taking the money that was credited to you during the investigation out of your account.