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Watch Out For Automatic Billing

An increasing trend for many subscription based services is to set you up for automatic billing at set intervals. While this can be a good budgeting tool for necessary recurring bills like utility payments and car payments it can be a huge headache for unnecessary expenses.

Case in point. My wife bought me several magazine subscriptions for Christmas, one of which was Barron’s. She purchased the subscriptions through Magazine.com which is a broker to purchase magazines. One small point that she missed when she made the purchase is that for some magazines the company will automatically bill you when the subscription is about to expire. Great if you’re expecting it and have planned for the charge. Bad if you’re not expecting it or in fact have no idea that it is going to happen. In my poor wife’s defense I will mention that she is not American and is not accustomed to these types of practices from her home country, so it’s not surprising that she got burned by this. She simply had no idea that this type of thing was done.

So, after logging into our checking accounts this morning I see an overdraft protection fee in my checking coming from her account. Switch over to her account and yes it is overdrawn, thanks to a $59 charge for Barron’s. Well at least I had the foresight to link the accounts so my balance covered the overdraft.

I immediately jump on IM and ask my wife if she authorized the payment, she tells me no, she has no idea where the charge came from. Well, I have a pretty good idea that it was an auto bill payment from Magazine.com so I ask her to send me a copy of the initial order confirmation. Sure enough, when I read the details I find that Barron’s is included as one of their “Preferred” subscriptions, which means they do rebills on it. Of course they sell this as a convenience to you, the consumer, because you’ll never have to be bothered with bills coming from the subscription company and never have to worry about missed issues. Bullshit! I want to know when I’m being charged for something and if I miss an issue I can always pick it up at the news stand…but I digress.

The thing is, the agreement states that they will “never charge your credit/debit card without notifying you first!” and that you will receive an email notifying you that your subscription is going to end, how much it will cost to renew, the number of subscriptions, your shipping address and what card they are going to charge. Surprisingly, my wife never received any email from them.

I called them to explain that they billed us and we never received the email. I have to say that they were very polite professional and offered to refund the charge. I also asked them to cancel any auto billing on other magazines which they promptly agreed to. While they were very quick to correct the problem I still feel that the practice of setting up the rebills in the first place is wrong. I am glad though that Magazine.com was quick to correct the error.

Lessons learned:
1. Never set up automatic recurring billing for non-necessary items
2. If you do set up auto billing make sure you know when it is going to happen and that you have the funds to cover it
3. Check your bank account daily for any irregularities
4. Don’t let your checking account balance fall too low. Having a cushion of even $100 can save you loads of grief and fees.

Here are more words of wisdom regarding the subject of Auto billing:
Why I Don’t Do Auto Billing
Why I’m Skittish Around Automatic Billing

And an alternative to auto bill payments (which I am investigating for myself)
The Evils of Auto Billpay

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