Is there a downside to always blocking further payments to vendors?

Question

One hears about situations where someone legitimately pays using a payment card, but further charges are made unexpectedly. Examples include additional charges determined by the company without approval from the customer, charges determined in error and signing up to repeated payments when a single payment was expected.

According to Citizens Advice it is the law that you can withdraw your consent and stop a future payment. This can theoretically be done by email, which the CAB saying:

The law says you can withdraw your consent and stop a future payment under a continuous payment authority at any time up to the end of business on the day before the payment is due.

To withdraw consent, simply tell whoever issued your card (the bank, building society or credit card company) that you don’t want the payment to be made. You can tell the card issuer by phone, email or letter.

Assume one could set up a system that does this for all card payments automatically unless one actively stopped it happening, what could go wrong? Would there be any downside of doing this, assuming one did not make a mistake and block a payment one meant to make?

I have addressed the general problem in this question, and a legal aspect in this question. I have borrowed content from both for this question. To be clear, I would proactively turn the consent withdrawl off for the very payments I would like to reoccur. For me this is less than five, and they change less then once per year.

Answer 1

You're solving the wrong problem.

You're trying to prevent unauthorized charges by following the law on how authorized charges are handled. But the problem you're trying to solve is someone doing something they were not supposed to be doing to begin with, so what makes you think they'd adhere to your demands on this?

Credit cards have very strong fraud protections and chargebacks cost merchants a lot, and merchants do not want them. So a mere threat of a chargeback would be enough for most to issue a refund for an erroneous charge and remove your payment details from their systems. That is a much simpler solution, since you'd only be doing that when actually needed, which is rare.

Answer 2

1. Note that unauthorized charges are trivial to dispute and charge back. There is some hassle in getting a new card number to prevent further fraud, but at worst that means you are without that card for a week. If the problem was clearly your fault for not cancelling, though, that's on you

2. Sone banks will let those who are really concerned about this turn their card on and off, typically from a secure web page or phone app. If your bank offers this, you could leave rarely-used cards disabled most of the time.

3. If you're really, really concerned, some banks offer the ability to generate single use credit card numbers. That prevents a second charge from being made. However, anyone who is expecting to do a monthly pull will probably not accept such a card number in the first place.

Really, most of your concerns are easily dealt with by never signing up for anything without reading the contract, and most of the exceptions are easily dealt with by charging them back to the vendor (see point 1). You're talking about developing a nuclear flyswatter. And you're picking one of the most difficult ways to go it. I strongly suggest reconsidering both the severity of the problem and the appropriateness of your proposed solution.

If you still want to pursue it, that is no longer a Money question but a programming/AI question, which means more detailed discussion is probably out of scope here. Try an appropriate software development stack. The only way to answer whether it is possible is to try to do it, or pay someone to try to do it. Be aware that usage agreements for the systems you want to interact with may mean you aren't permitted to do it even if you somehow make it work, and being caught may have unspecified consequences starting with cancellation of that account.

Answer 3

1. Obviously, you'd have to devote a lot more time to managing payments. For most people, it is easier to dispute the rare fraudulent/ invalid charge after the fact than it is to proactively approve every recurring payment they have every week.
2. For most people, the inevitable error when they forgot to approve the electric bill payment and incurred a late fee overwhelms the savings from blocking a rogue payment. Particularly when they can simply dispute that payment after the fact if it was actually incorrect.
3. Cancelling a payment method does not mean that you don't owe the vendor the money. If you sign up for a recurring payment like the gym and decide that you're not going often enough to be worth it, you can block the gym from taking their payment. But that doesn't end your contract with the gym-- you still owe them the money. Lots of customers aren't going to be aware of this until the gym sends them to collections a year or two later.
4. Depending on exactly what you allow/ disallow, you may experience issues with a variety of transactions where you do want the amount to change. If you go out to a restaurant, for example, the restaurant will run your card for the cost of dinner. You'll get a receipt with a line to add a tip. After you write in the tip, the merchant will go back later and update the amount of the charge to include the tip. It would be very difficult for your theoretical service to figure out whether this would count as an "additional charge" that you want to block. Other times, establishments process an authorization for a higher amount and adjust it to the actual amount before the transaction settles. If you pay for gas at the pump, the station puts through a relatively high authorization amount ($100 is a common default in the US in 2024) and then adjusts the transaction down to whatever amount of gas you actually pumped before the transaction settles.