Due to recent credit card fraud, I was issued a new credit card with a new account number.
Within a week, I logged into Cox Communication's website to update my payment information. My credit card company already sent Cox the new information! Alright, I thought all was well.
A few days later, I received an email from Cox, saying that my "payment was returned." I was charged a $25 fee, and I had an outstanding balance due immediately.
I called customer service. I was told that payment information must be updated one billing cycle in advance. They offered to refund the returned payment fee. (While I politely accepted the refund, I thought, "I'll ask my thief to give me a month's notice next time.")
A fee refund is simply not good enough, though. If Cox has valid payment information, and their system is using old payment information, that is negligent. When they charge a fee for their own negligence, it becomes fraudulent.
This is a consumer welfare issue. With credit card fraud becoming so rampant, Cox probably is making a lot of money from these practices. Worse, consumers don't have good alternatives to Cox Communications, given their natural monopoly power.
1. A declined credit card charge is not a returned payment
A check is returned when remitted against an account with non-sufficient funds (NSF). This poses a liability for the institution cashing the check. Charging a fee for an NSF check (a returned payment) makes sense, due to this liability.
Charging a fee for a declined credit card payment is a gross misrepresentation—no payment was returned! Credit cards are declined regularly for a variety of reasons. These declined charges occur electronically in real-time. This eliminates the liability posed by a "returned payment." Indeed, if the company submitted a manual imprint with a signature, Visa will always pay the merchant! (See Visa's Merchant Guidelines.)
Calling a declined credit card charge a "returned payment" is a slimy way to charge a $25 fee. Especially when you have valid payment information on hand!
2. Payment info must be updated a month in advance?!
Cox is a telecommunications company. Their company should be technology experts. Cox managed to get my updated payment information directly from my card issuer and updated it online before the bill was due. But Cox couldn't use it?
I am certain that Cox can use this updated payment information that they quickly obtained from my card issuer. The problem is that Cox has no incentive to use it! Cox knows the new card information is accurate, so they charge a $25 fee, wait ten days, then charge the new account that they knew would work all along.
Nice scam, Cox.
Refunding the "returned payment" fee
We'll see when this fee is refunded to my account. Right now, I'm guessing that it won't be refunded before my next EasyPay™. Why would it? If not, I should mail them a bill for interest on the fee.
While I'm at it, I'll mail a couple letters to my local representatives. With the frequency of credit card fraud and Cox's monopoly power, this is a disgusting scam that apparently legislature must address. I'm sure many consumers don't notice the fee, simply shrug it off, or don't manage to obtain a refund. Cox has no incentive to change this practice, so we need our local representatives to give them such an incentive.