Many subscription services charge your card on a set date every month, regardless of when you pick up or receive your purchase.
Dear Your Business Credit,
We’ve been dealing with a winery that likes to charge for its wine two to three weeks before we can physically pick it up from the winery. What is the law on dealing with this kind of pre-charging of our credit card? I know we could quit getting wine from the winery or cancel our membership, but the winery owner is a neighbor. We are not trying to be mean about this, but we are trying to keep him from getting in trouble legally. Thanks for any advice you can give about this. – Bruce
In your letter you mention you have a membership in the winery, so I’m assuming you are part of a wine buying club. My assumption is the winery is charging you on a set date for the shipment because there is a rule saying that if you don’t make a pickup by a certain date, the winery will ship the wine to you. Charging everyone on the same date is probably how the winery keeps things organized.
Merchants may charge before shipping
It does not seem that the winery is breaking the law by charging you in advance for the shipment. As my colleague Sally Herigstad pointed out in her column, “Your rights if a merchant charges you but delays shipping,” the Fair Credit Billing Act and the Mail or Telephone Order Merchandise Rule say you don’t have to pay for merchandise you don’t receive – but they don’t spell out when the merchant can charge your card.
That said, many credit card issuers have their own rules on when charges may be processed, so merchants should look at those rules for the cards they process.
Regardless, it appears you don’t like the payment arrangements and would prefer to be charged upon pickup. If you want to make a change, I’d suggest first looking at your contract to see what you agreed to, so you know where things stand. Then, ask if the winery offers other options, such as making a small deposit and then paying the balance upon pickup.
Tip: Ask if you can make different arrangements for payment, such as making a small deposit and paying the balance upon pickup.
Best practices for recurring charges
Because many consumers don’t like being surprised by recurring charges like this, even if they initially agreed to them, I’d recommend that merchants overcommunicate about them.
As a best practice, Visa recommends that merchants notify customers who have agreed to recurring transactions that they will be charged at least 10 days in advance. The notice should include the amount to be charged to the account and if relevant, alert the cardholder if the transaction amount exceeds a pre-authorized range. Visa notes that local law may impose specific requirements for this notification, so it is possible there are other requirements the winery must follow.
Any business owners who want to make sure they are following local laws on this front should start with the state attorney general’s office to find out what rules apply, and ask if there are any city or county rules that also may apply.
It’s always best to be well-informed about your obligations as a merchant. It can save you a lot of time dealing with frustrated customers later.