Very Dodgy Practice by my Credit Card Provider

MisterX on 14/12/2020 - 18:37
Last edited 17/12/2020 - 15:35

Hi OzBargainers,

Need your opinion on this situation I have with my Credit Card (don't want to name the bank just incase). I personally feel there's something dodgy happening, but please let me know what you all think.

Here's the timeline of events:

  1. I wanted to make a $1999 purchase, but before doing that, I decided that I will pay off the credit in full before I make the purchase (also to avoid interest).
  2. On 05/11/2020 - 9:30AM, I pay off the entire balance of the credit card. Double checked in online banking, which showed Available $5000 (full limit) and $0.00 (owing).
  3. On 05/11/2020 - 9:47AM, I go ahead and make the purchase of this $1999 item.
  4. On 12/12/2020 interest was deducted from my account (this was the one thing I wanted to avoid).

Now here's where the big problem is:

  • The statement pushed the $1999 purchase back 1 day to before the big deposit was done that paid off the credit card. The statement said I made the $1999 purchase on 04/11/2020. This makes the statement say I basically didn't pay off the full balance ever. Attachment: Statement
  • The ledger in my online banking says the $1999 purchase was 06/11/2020 (makes complete sense as sometimes it takes time to process). Attachment: Online Banking
  • The receipt for the purchase says 05/11/2020 9:47AM (exactly the time I made the purchase). Attachment: Receipt

This almost seems like someone manually pushed the $1999 transaction and backdated it just so it looks like the full balance was never paid off. This is what triggered the interest event on my card.

Went to the bank today:

  • They couldn't explain it why that $1999 backdated. If anything, some transactions take longer to process and could appear 2-3 days later. There is no logic why any transaction could go back 1 day. Anyway, the nice girl at the counter couldn't explain it, nor could the head office chat she was on.
  • Why my ledger says the transaction was 06/11/2020 and statement says 04/11/2020. This is an extremely obvious discrepancy. Couldn't explain that either.
  • Couldn't help me anymore so gave me a pamphlet which said to contact a special 'customer advocate' team and potentially the AFCA.

How can they do this?

*****UPDATE*****

Interest was refunded.

Financial Credit Card

Comments

  • justdigi on 14/12/2020 - 18:48
    +11

    Backdating happens if your card is processed in the USA and it’s still the previous day. 9.47am 5th is 2.47pm on the 4th.

    • MisterX on 14/12/2020 - 19:23

      That'd be one explanation I'd be willing to accept.

      It still wouldn't explain why online banking and statement would have such a big discrepancy.
      Online banking 06/11/2020
      Statement 04/11/2020

      I just emailed them, so hoping for some explanation.

      • justdigi on 14/12/2020 - 19:31
        +1

        One is processed time the other is cleared time. They can be 3 days apart or longer.

        • reactor-au on 16/12/2020 - 07:25

          Or longer if the card company isn't sure the transaction is legit, or like a car rental company could "hold" the funds but not process it (for insurance etc).
          Could be many instances.

    • MisterX on 17/12/2020 - 18:15
      -2

      I actually did a check of all PayPal transactions and receipts from email today. All the dates match to exactly as on the statement.

      Crazy how conveniently this $1999 transaction got backdated.

      This actually rules out the timezone theory.

      Anyway at the end I got refunded the interest by the bank. The guy actually couldn't answer why it backdated.

  • try2bhelpful on 14/12/2020 - 18:51
    +1

    The purchase being pushed back a day makes no sense. I could see that the Bank might push the payment to an overnight transaction, which means the actual credit card payment might occur after the purchase, but not how the purchase can go back a day. Unless there is some “local time” issue with offshore processing but that would be very dodgy indeed. I, suggest, you contact the customer advocate team and ask them what documents you need to send to them. Indicate you want the interest reversed ASAP and be provided with an explanation on why the backdating and if card payments are instantaneous or an overnight process. Good luck.

    • abcdefghi on 15/12/2020 - 08:24
      +2

      I've been caught here with my bank accounts. Waited until payday, transferred money around (within the bank, so immediately available), then purchased my groceries using PayPal. Got stung with overdraft interest at the end of the month, never actually overdrawn, so I asked WHY?

      ANSWER: Banks will use the time & date as provided from the vendor / payment partner. So when PayPal processed my AM-Brisbane-time transactions in Denver, Colorado, USA, they were reported to the bank as being transacted the previous day. Even though I had a receipt that said the AU date. So yes, "“local time” issue with offshore processing but that [IS] very dodgy indeed". The banks are smart enough that they wrote this timing situation into their terms & conditions, so AFCA can't / won't take action. It's considered an unfair contract term, so needs to go to ACCC for their consideration and ruling. I couldn't be bothered going that far.

      I did have some luck with getting my bank to refund the overdraft interest, as a one-off gesture, then changed my technique to using my credit card which is never near the limit.

      • Krogers on 15/12/2020 - 09:52

        needs to go to ACCC for their consideration and ruling.

        To have a contract ruled unfair you only have to go to a magistrate. So if you take it to small claims court and the magistrate rules it unfair that's all you need. ACCC can't make a ruling on it.

        • try2bhelpful on 15/12/2020 - 11:01
          +1

          The Banking Ombudsman is the one to talk to.

          • Krogers on 15/12/2020 - 11:15

            @try2bhelpful: There is no "Banking Ombudsman" and the role of Financial Ombudsman has been superceded by AFCA

      • MisterX on 15/12/2020 - 11:13

        Woah that is very similar to my situation! Thanks for your post. I'm hoping they'll do the same with refunding the interest.

  • Hybroid on 14/12/2020 - 18:51

    9:47AM, I go ahead and make the purchase of this $1999 item.

    Local or international purchase? It's still the day before in most of the world.

    • peter05 on 14/12/2020 - 18:55
      +2

      I'd go with this and wouldn't be surprised if someone down the line used local timecodes instead of UTC so it caused the time shift

      • MisterX on 14/12/2020 - 19:25

        Yep, the first comment did mention this. I guess that is acceptable if the bank's explain it that way. Waiting on their reply for now.

        The transaction was local though, Microsoft Australia, and it was in $AUD.

        Really wanting an explanation on the discrepancy too:
        Online banking 06/11/2020
        Statement 04/11/2020

    • MisterX on 17/12/2020 - 18:15
      -1

      I actually did a check of all PayPal transactions and receipts from email. All the dates match to exactly as on the statement.

      Crazy how conveniently this $1999 transaction got backdated.

      This actually rules out the timezone theory.

      Anyway at the end I got refunded the interest by the bank. The guy actually couldn't answer why it backdated.

  • Stewardo on 14/12/2020 - 18:52
    +2

    On my credit card, which is with the same bank as my other accounts, when I transfer a credit card payment it takes a couple of days to process and show up in the credit card, I know that some banks branded credit cards are actually operated by a different company.

    • MisterX on 14/12/2020 - 19:28
      +1

      The statement and records all indicated the pay off was completed. There was no pending, balances showed full and owing showed $0.00

      The biggest peeve was the back dating and discrepancies between online banking and statements.

      • xuqi on 15/12/2020 - 00:43

        MS Australia generally process payment using an Irish entity.

        • jv on 15/12/2020 - 00:54
          -2

          using an Irish entity.

          You're joking…

  • No on 14/12/2020 - 18:52

    My guess is this situation would have sorted itself out by the time the statement was done. I've seen some pretty weird activity in my Citibank online banking but it always comes good when the statement is issued.

  • valleyrain on 14/12/2020 - 19:13
    +1

    (don't want to name the bank just incase)

    Your screenshots give away the bank name. Perhaps, you may want to black out that information.

    showed Available $5000 (full limit) and $0.00 (owing).

    Are you sure it showed the full amount as available and not some as pending? I know sometimes it takes a day for amount paid to be reflected in the available amount.

    • MisterX on 14/12/2020 - 19:17

      No pending figures that day. Triple checked everything before I made the purchase.

    • Roney on 17/12/2020 - 20:21

      The screenshot showing the bank name is a favour to all of us. We need to know this. Pushing back the date by that far is a sneak felony with extra interest plucked out of our pocket without our awareness. Other lenders could do the same.

  • tsunamisurfer on 14/12/2020 - 19:15

    On 05/11/2020 - 9:30AM, I pay off the entire balance of the credit card. Double checked in online banking, which showed Available $5000 (full limit) and $0.00 (owing).

    It is unusual that your credit card balance would be cleared so quickly unless your credit card provider is the same institution as your transaction account bank.

    • MisterX on 14/12/2020 - 19:16

      Yes, same institution, went from my everyday account into the VISA. I bank my cash with the same provider and all transactions between accounts are instantaneous.

  • trapper on 14/12/2020 - 19:38
    +6

    Even if there is some flaky explanation due to the timezones and what not, it is still completely unfair for you to be penalised by this.

    The balance was paid in full before the purchase was made. And this is all easily demonstrated - even by their own records!

    I would expect a full refund of this interest charge.

  • robbyjones on 14/12/2020 - 19:42
    +1

    No matter the reason for the error it is that, an error, and you have proof of the timing of the transactions so I would wait to hear back and if not satisfactory then send a letter/email with attachments as proof and request that all charges be reversed. I am sure everything will be fine but if not you could take it to the ombudsman.

    I have made a mental note of this as I also have my credit card with the same not mentioned bank, so thank you.

    • MisterX on 14/12/2020 - 21:02
      +1

      Yep, CC'ed the AFCA in the email. Really looking for a reversal. Even though its only like $50, the principle is wrong.

      • brokenglish on 15/12/2020 - 09:54

        $50 is not “only like”.
        I’d definitely chase for a refund. Good luck.

  • Settero on 14/12/2020 - 20:26
    +2

    Hey OP.

    It sounds like you spoke with branch staff, branch staff would not be able to answer this and most likely wanted you to just go away.

    I would advise you to call the cards team for your bank ( yes we all know who you bank with now ! ) and just tell them straight , i think there has been a error , please fix it.
    if they say no, its not a error , you can ask them to raise a complaint where someone is paid to look into it for you.

    its more than likely a system issue due to one of many reasons that occurs very rarely and not intended malicious action.

  • whooah1979 on 14/12/2020 - 20:50
    +2

    Very Dodgy Practice by my Credit Card Provider

    A bank doing something dodgy for profit doesn't come as a surprise. Was this Westpac?

    • MisterX on 14/12/2020 - 21:01
      +1

      Some people have worked it out who it was. I guess my not so good attempt at hiding it didn't work.

  • EFC94 on 14/12/2020 - 21:08
    +3

    I could be wrong, but isn't interest charged a month later? OP was late to pay off or didn't pay off entirely their November balance, which then charged interest to OP in December?

    • MisterX on 14/12/2020 - 21:34
      +1

      That's the thing, I paid off the card earlier than due date (Oct to Nov) and under the period so I can extend the interest free days.

      What happened was the $1999 backdated to before I paid it off, meaning the balance was carried on from October November December, hence the interest charge.

      If the $1999 didn't backdate and as expected, there would be no interest charged, as it'll have been deducted off a fully paid credit card + 44 days.

      • bargainbro on 15/12/2020 - 07:27

        This doesn’t make sense. If you’re getting charged interest for the $1999 purchase it means that you were accruing interest BEFORE you paid off your balance. If you were in your interest free period it would make no difference whether you paid it off early or on your due date, you would continue to get interest free days and a new purchase would not trigger interest.

        Since you were accruing interest before you paid it off, maybe the interest charge is for the interest you accrued before you paid off your balance. The interest doesn’t just magically disappear if you pay off your balance early. From the Westpac credit card T&Cs “ You may see interest charges on your next statement even after paying the Monthly Payment Balance in
        full by the due date.”

        • User64 on 15/12/2020 - 07:47

          I'm pretty sure (can't be 100% because there is not enough info in the post and comments) that, just like the girl in the branch and the person on the phone from head-office, MisterX does not fully understand how credit card interest is calculated. I agree with EFC94 and bargainbro. Interest charged in Dec was accrued from purchases prior to the $1999 in Nov. I recommend Afterpay if this does not make sense.

        • MisterX on 15/12/2020 - 07:50

          The fact is, because of the backdate of the $1999 purchase, the card was never paid off at all..

          If the 1999 transaction happened after the card was paid off, that means the previous period I only used 29 days of the interest free period and it all resets. And yes I know all about residual interest which is what you implied. I am very clear on how it works and how interest could be from previous periods, but this time it wasn't the case.

          It only accured because the negative balance was kept up for much longer than the interest free days.

          • bargainbro on 15/12/2020 - 07:58

            @MisterX: No, you do not seem to understand how interest free periods work. If your previous balance was not accruing interest, your $1999 will not accrue interest either. Once your monthly balance closes off and a statement had been issued, the monthly balance on that statement is all you need to pay off to continue getting interest free periods even if you continue making purchases.

            If your $1999 attracted interest then your previous balance also attracted interest too.

            • MisterX on 15/12/2020 - 08:13
              +1

              @bargainbro: I think I phrased it wrong and I just understood what you're saying

              Yes the $1999 would not have any interest accured on it, the interest is charged on all the stuff in the negative balance before it.

              The pay off on the 5th was to clear the stuff before and bring the balance back to zero. However when the statement pushed the $1999 to before the pay off of the credit card, all the transactions previously would have accured interest.

              Sorry I shouldn't have phrased the $1999 was charged interest. But yes the previous stuff wouldn't have been charged interest if the negative balance was cleared before statement (which wasn't the case when the 1999 magically moved)

              • bargainbro on 15/12/2020 - 08:25

                @MisterX: Nope still doesn’t make sense.

                Let’s use an example.

                Say your balance closes off on the 15th off the month.

                If your closing balance at 15/10 was $3000 and not accruing interest, if you make a repayment of $3000 on 5/11 and make a purchase of $1999 on either 4/11 or 5/11, you will pay no interest.

                If your closing balance was $3000 at 15/10 and accruing interest, even if you make a repayment on 5/11, you will have interest showing on your statement which gets issued on 15/11 REGARDLESS of when the $1999 entered the ledger.

                Also you mentioned that the interest was about $50. Unless your credit card interest rate is 30%, your $1999 purchase would not attract $50 in a month.

                • MisterX on 15/12/2020 - 08:51

                  @bargainbro: again, not implying the $1999 accrued interest, which you've directed to again with the 30% comment. maybe some miscommunication here. lets leave it at that.

                  i been cycling my cards routinely for maybe 7-8 years with this altitude rewards card. this is the only time an issue came up with the back dated transaction pushing my previous balance into interest charging period.

                  • bargainbro on 15/12/2020 - 09:14

                    @MisterX: A transaction cannot push you into an interest charging period. Once a monthly statement is closed off that’s it. Whatever number is printed on that statement is the amount you need to pay to continue receiving interest free periods. Even if a subsequent transaction is backdated to a date within the previous statement period, if it isn’t on the statement when it’s issued then it does not make up your monthly closing balance.

                    The only things that determine whether you get interest free periods is the total of your last monthly account balance and when you make the payment. Subsequent transactions will not change that.

                    • Jono05 on 15/12/2020 - 12:42

                      @bargainbro: I think some people don’t know how the interest free period on a credit card works.
                      OP, was your previous balance over $3000? From your attached photo, it looks like it was so just confirming. If it was and because your $1999 purchase was debited the day before (so your card in date terms wasn’t paid off yet) that purchase has put you over your credit limit of $5000 and that’s what the $50 charge is for. It’s not an interest charge, it’s for exceeding your credit limit. I would still try to get it reversed. Might need to increase the credit limit on your card.

  • SF3 on 14/12/2020 - 22:20

    OP - is Eastpac going to credit you the interest they shouldn't be charging, what did they say from your discussion at the branch?

    • MisterX on 14/12/2020 - 22:36

      Awaiting reply from an email I sent to the advocate team, CCed AFCA.

      The branch couldn't answer anything. Young girl at the front understood the issue but couldn't understand why there's the discrepancy. Head office was on live chat too, but didn't help.

      She ended up giving me a 'feedback and complaints' pamphlet and told me to follow up with the customer advocate team or if it's really serious, AFCA.

  • AustriaBargain on 14/12/2020 - 22:22

    What is one month's interest on 2k even cost you anyway?

    • MisterX on 14/12/2020 - 22:32

      I actually continued using the credit card from the full payment date as usual with a reminder in my calendar to pay off before interest free period ends.

      Unfortunately there wasn't an interest free period, and accumulated interest the whole time due to the back dating.

      It's only like $50, but the principle kills me. The whole scenario almost seems they're doctoring the statements.

  • Seraphin7 on 14/12/2020 - 22:40
    +1

    As others have said, the most obvious explanation is that this was an international transaction where the time at the place of processing was still 4th December.

    OP, is this a logical explanation? Not saying it's right, but is that what's happened?

    This almost seems like someone manually pushed the $1999 transaction and backdated it just so it looks like the full balance was never paid off. This is what triggered the interest event on my card.

    This would not have happened. Let me assure you, no one at the bank has any interest (let alone ability) in doing this.

    Online banking 06/11/2020
    Statement 04/11/2020

    This is not noteworthy. A healthy percentage of my transactions (if not a majority) look like this due to fundamental delays in the way card scheme payments are processed and cleared.

    You first need to get to the bottom of the most likely explanation, noting that the international transaction scenario is very plausible and you haven't denied this possibility. After that, you need to understand the terms of your card contract. Assuming everything to this point is in order, you can effectively go for a goodwill rebate on the interest charged.

    • MisterX on 14/12/2020 - 22:50

      Thanks for the insight!

  • kaleidoscope on 14/12/2020 - 22:41
    +1

    I would not call this dodgy but rather something that happens with international purchases as we’re +10gmt… You should not have waited till last day of interest free period to settle an expense imo… As you’ve mentioned you’ve contacted them, they will likely remove the interest charge this looks to be an error from their system.

    • MisterX on 14/12/2020 - 22:52

      Yep! I plan pretty accurately and have a structure setup with my finances.

      Unfortunately couldn't plan for this scenario. International payment seems like the explanation. Potentially learning now that PayPal $AUD is internationally processed..

  • p1 ama on 14/12/2020 - 22:54
    +2

    Sidestepping the actual issue at hand, it seems to me that the broader issue is that you have a $5k limit. If you're purchasing things which are up to 40% of your limit at a time, you probably need to get a bigger limit which will avoid issues like this.

    • MisterX on 14/12/2020 - 23:01

      Haha invited many times for a bigger limit but don't really need it. I juggle the interest free days + accumulate points perfectly and routinely. Unfortunately couldn't beat the doctored date one of the transactions went through on!

      • p1 ama on 15/12/2020 - 20:25

        Well not really "doctored", but the dates are never a precise science IMO because small transactions are not settled real time. Whether you need it or not, a bigger limit is useful when you need it.

        If you had a bigger limit, you would have just done all of your purchasing up until 12/12 (or whenever your statement period ends), then pay it off and no dramas. Basically, I would never pay off a CC early. If you have to, your limit is too small.

  • eddieboy2 on 15/12/2020 - 09:06

    It is possible that your Bank, at the end of the day, processes debits first, then credits, in that order. Always best to wait till next day to do this…pay off balance…then wait till next day to purchase.

    • soan papdi on 15/12/2020 - 09:37
      +1

      https://www.startribune.com/u-s-bank-owes-2-7-million-people…

      Haven't heard of Australian banks doing this but some US banks have

      The deal settles claims that the Minneapolis-based lender for years wrongfully boosted the overdraft fees it charged on debit card transactions by reordering transactions to post charges from largest to smallest amount instead of when they occurred. That type of resequencing can draw down customer accounts faster and more frequently, multiplying fees.

      The pact is part of a mass of class-action litigation over the high-to-low overdraft practices that has generated more than a dozen bank settlements in recent years. Three banks, including Wells Fargo, are still fighting the lawsuits, said Robert Gilbert, the Coral Gables, Fla., lawyer representing bank customers.

  • OzHunterNSW on 15/12/2020 - 09:53
    -4

    We don't have time to read your tomb of rambles.

    Just get to the point in a concise succinct manner.

  • brad1-8tsi on 15/12/2020 - 12:34
    +3

    Did you ask them to refund the interest? I've had interest refunded several times when I've had a dispute with my CC provider.

  • Aniseed Steed on 15/12/2020 - 12:56
    +1

    I've found most banks will refund fees/charges you have incurred inadvertently, as a one-time goodwill gesture, if you ask them,
    especially if you're a longtime customer in good standing .

  • MisterX on 17/12/2020 - 15:35
    -1

    *****UPDATE*****

    Got the interest refunded.

    • Roney on 17/12/2020 - 20:36
      +1

      Hooray, we are happy for you! What was their reason for the refund? The southpac (and others?) could have been doing like that to us for years.

      • MisterX on 17/12/2020 - 21:17

        They just went ahead and said to resolve this claim, would you like a refund.

        I asked him a few times why it was backdated, and couldn't answer it. Also assured me that it's impossible to change statements, no one has the capacity to change it etc.

        I think I'll settle here. I've never paid interest on credit cards before as I manage my finances quite cleanly. Pretty unfortunate this time I couldn't prevent it..

        • Roney on 19/12/2020 - 02:07
          +1

          Good on yer. Thanks for your reply.

    • try2bhelpful on 19/12/2020 - 07:11
      +1

      Good it got resolved for you.

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