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A disposable credit card company from the US wrote 'recently' on their twitter

Canceling a subscription can be difficult, time consuming, and frustrating. Or it can be as easy as clicking a button and closing/pausing your [...] card.

Source: https://twitter.com/PrivacyHQ/status/1083048623678672900

So the way this works is that you have one virtual card per merchant/transaction and you can easily disable the card from the application (e.g. you sign up for a Netflix free trial and disable the card straight away).

My understanding is that if you fail to pay the company they can sue you for failure to pay and still demand the money in question. The one thing I can imagine affecting this is whether the company continued to provide the service in question (e.g. in the case of Netflix they will block your account when the payment fails), but I can't think of any legal basis how that would make a difference (as you still have a legal agreement to pay).

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  • I don't live in the US, but considering the above statement was made by a US company I figured I would ask about US law anyway.
    – David Mulder
    Commented Mar 4, 2019 at 9:16

1 Answer 1

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You owe money if there is a contract obliging you to pay. Whether you receive what you pay for (e.g. services) only affects your stance when suing for non-performance/damages; your obligation to pay still stands until the court decides it does not (or there is a mutual agreement to discharge the contract).

It is irrelevant whether the original payment method still works or not. If it does not but you still owe money — you have to pay.

The ability to turn the credit card off is just a handy feature. It does not affect your contractual obligations in any way except for when the terms explicitly provide for it (like automatic cancelling subscription when payment method fails).

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  • 2
    The key point is that if you don't pay because a credit card fails, they have to sue you for non-payment, while if you do pay and don't have the credit card company reverse the charges, you have to sue them for a refund. Since small dollar suits are usually not economic to bring in interstate or international commerce, the status quo often prevails. Where possible, companies like Netflix avoid costly interstate and international lawsuits with self-help remedies like suspending service for non-payment, rather than suing customers when subscription fees aren't paid.
    – ohwilleke
    Commented Mar 6, 2019 at 0:38
  • I had one subscription that wanted payment by Direct Debit, and they said "to cancel the subscription, just cancel the Direct Debit".
    – gnasher729
    Commented Apr 5, 2022 at 9:45

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