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Does Your Merchant Agreement Have An Auto Renewal Clause?

    Emily Hale
  • 24 comments
  • Updated on:
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Emily Hale

Emily Hale

Emily is a content and social media strategist based in Indianapolis. She enjoys discovering new topics and planning content that empowers small business owners to make better choices for their businesses. When she's not in the thick of doing research for Merchant Maverick, she likes painting, meandering through nature and spotting wildlife, or relaxing with her rescue pup, Jetta.

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24 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    April

    What happens if a company auto-renews, but because the card is no longer in use and empty, no charge was made but they are threatening to take you to collections for not paying?

    I only became aware of it after the deadline had passed and they automatically renewed me. When I tried to cancel my subscription, it said that if I cancel I would still be obligated to pay for a year of service even though I am canceling.

    Can they charge me for a year of service if I cancel and will not be using their service?
    Can they send me to collections for not paying to cancel?
    This company is in Germany and I am in the U.S.

      Jessica Dinsmore

      Hi April,

      Have you reached out to the company and spoken with a customer service representative to work out a solution? If you have, I’d suggest escalating the matter to the supervisor level, or maybe even several levels up. When speaking with the company, emphasize that no payment was made (because the card had expired) and you really don’t want the company’s services anymore. If you hadn’t been using their services, even better–and definitely mention that. See if they’ll agree to cancel, just because they want to give a good customer experience. If not, you can try requesting a reduced term (say 3 months?), and consider taking the deal. Don’t forget to be nice/polite to the person on the other side. Sometimes, they’ll go an extra mile for you if you treat them with respect. Good luck!

        BRIAN M MCLAUGHLIN

        Hello, I was under contract with a heating oil company. The contract was for 1 year. At the end of that year I renewed the contract for another year. That same day I was apporached by a competing heating oil company that offered a much better price so I contracted with them. The renewed contract was cancelled by me in writing the next day. I assumed that I had the same contract terms from the original which stated that if I cancelled in writing in 3 business days that the Early Termination Fee would be waived. This language was not present on the renewal contract. Note, that the renewal was done over the phone and no written contact was signed, however I gave my verbal consent. I am now being charged $399 from the original oil company and they are standing put on charging this fee. Stating that the renewal does not have the same right as the original contract. In my opinion, the renewal is a new contract and would enable me the right to exercise the 3 days buyer remourse clause. Thoughts?

          Jessica Dinsmore

          Hi Brian,

          It sounds like you might want to consult with a lawyer experienced in contract law. Our expertise on contracts is limited to Merchant Accounts. Best of luck!

            Sherry W

            Our company has been held hostage in an auto-renewal contract with a trash disposal company since 2001……………..yes, 18 YEARS! During that time, our rate has increased by 10% per year, so you can imagine how high it has become at this point. Phone calls to them to discuss some kind of price reduction were met with a swift reminder that they are operating under the terms of the contract and NO, there’s nothing that can/will be done about it. The auto-renewal clause locks us into 3 year terms, and with employee turnover in the accounting department, we have not been able to “catch” the small window of opportunity to cancel the contract. And like you mentioned, they require cancellation notices to be sent on company letterhead, via certified mail, between 60-120 prior to the end of the current term. Finally we were able to submit the cancellation notice following all of the various rules they dictated and our time with them is coming to an end. Now, of course, they’re offering all kinds of discounts, promotions & incentives to entice us to stay. Unfortunately, this experience has left such a bitter taste in our mouth, that we are no longer willing to work with them, under any conditions. But my question is this……………is there anything illegal about what they’ve done – auto-renewing us for 18 years? Was there anything else we could have done?

              Emily Hale

              Hi, Sherry! Wow, that sounds like a very frustrating cycle. Despite the length of time, there would likely not be anything you could do from a legal standpoint since the terms were laid out in the contract, and nothing was broken as far as that goes. Unfortunately, that is the nature of how frustrating these things can be. In situations that arise where the merchant account provider was unresponsive or in your case, you keep missing your window, what we recommend is to escalate the issue in a way by making complaints with the BBB or other review sites. Because that is your right to do so, and because it often gives them a little more incentive to respond and repair their reputation. Of course, I am speaking in general terms, so your situation may vary. I’m glad to hear that you were finally able to leave your contract. This Merchant Account Comparison page may help you find a better option. Best of luck on finding a better company that offers more flexible terms.

                E

                Can anyone help with California? It was a contract signed in 2013! They’ve renewed every year. I know, I should have “known,” but just recently tried to cancel and they threatened with early cancellation fee.

                  Emily Hale

                  Hi E,

                  That is the unfortunate thing about auto-renewal clauses. They do and can renew without your approval, and companies often don’t go out of the way to remind you, either. Your best bet is to take a look at your merchant agreement and follow the steps of cancellation outlined in this post. You can ask the company to waive the fee, but unfortunately that is up to their discretion. Best of luck!

                    Ronalyn

                    Does anyone know what happens when you live in New York, but the company(United States Bankcard service) you signed a contract in is California. The company they use to process your money (Global Payments) is in Maryland. So which state do you use?

                      This comment refers to an earlier version of this post and may be outdated.

                      Jeremy

                      most likely there is a clause in the contract stating that any dispute is to be settled in a specific state. read the contract. if not then it would be n the state where the dispute is filed with the court.

                        This comment refers to an earlier version of this post and may be outdated.

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