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Have you heard? Terminating accounts can be difficult

Jan Falstad
HAVE YOU HEARD?

The scarlet letter of bad credit has serious consequences.

Credit is harder to obtain. When you find some, you pay higher interest rates for goodies like a car. Higher rates can even saddle you to a more expensive home mortgage that can last as long as your working life.

A single late payment can stick to your credit report for two to four years.

So, it is understandable how sensitized consumers have become to threats to their good credit.

At the same time, trying to keep your credit record clean is getting harder.

Grace periods get shorter. Interest rate calculations require a working knowledge of advanced algebra, statistics and a touch of particle physics. The working rule seems to be once headed higher, interest rate charges by credit card companies stay in upward motion.

What is a "Mixed G" blended interest rate anyway? And how come it takes seven letters of the alphabet to describe all the ways of figuring interest on credit card debt?

Businesses fall all over themselves to sign you up.

However, trying to cancel an account is getting harder, sometimes really hard.

Cort Jensen, an attorney who heads the Montana Office of Consumer Protection in Helena, warns consumers to pay attention to any account they pay monthly. This includes telephone companies, cell phone companies, utilities, Internet services, and the like.

Keeping a customer is so much easier than finding a new one that Jensen says companies hire "retention agents" to try to hold onto your business or perhaps to squeeze another month's payment from you.

These folks usually work on commission.

You go to cancel, Jensen says, and the retention expert goes to work sweetening the deal by offering lower rates, a gift or even free service for three of four months.

"Even if you say no, these people may sign you up anyway for the free service because then they get paid," Jensen says. "You think you've canceled, but they've got you."

No bills arrive during the "free period" but then they start again in a couple months. Then you have to re-cancel your account.

Consumers trying to straighten out the mess get caught up in long talks with computerized voices, long waits on calls to India, or both.

"It's a strange desert island and the voice of God keeps saying, 'We're going to sue. We're going to sue,' " Jensen says. "You can only communicate by putting a message in a bottle, tossing it in the ocean and hope it gets to somebody."

When canceling an account even with a telephone company, don't use the telephone. You'll have trouble proving that you called, so that method doesn't work unless you ask for a confirmation letter, he says.

Cancel your accounts in writing, send the letter by registered mail and ask for a receipt of your letter or written proof that your request has been honored.

Try to cancel an Internet service and you can get caught in a special Catch-22.
This actually happened to me recently.

You think you're done and have moved on to another provider. However, the old company claims you owe another payment or two.

You don't know the old account hasn't actually been closed because the company only sends the billing notices by Internet to your closed account. The Catch-22 is, of course, you cannot access the account so you don't know that there is any outstanding balance.

My old Internet provider says it never sends written bills.

The first notice is when the company turns your "outstanding balance" over to a collection agency. A couple of pop-up ads were adequate notice, the company argued.

Try to fight the phony bill and straighten out the mess lands you in Internet limbo with hours of frustrating calls to India. I finally got the phony charges off my bill, but it took months.

The next time you want to close an account, follow these ABCs from Jensen:

• Search for those physical addresses and close the account in writing. Keep all records.

• Demand written confirmation that your account has been closed, preferably by certified letter requesting a return receipt.

• Make sure the old account doesn't magically reopen in the next few months.

• Check with the three credit reporting agencies to make sure no bad marks landed on your record from the dispute.

• If you are served papers to appear in court on an unpaid debt - even an erroneous one - don't default by blowing it off. Show up and defend yourself.

The above advice applies to all accounts with one exception. Mortgages are a special animal.

Do not mail inquiries to your mortgage company with your bill. Lenders often outsource billings to third-party firms. These bill collectors may throw out all correspondence that isn't a check.

So, if you have a question or complaint about your home loan, you have to correspond directly with the mortgage company.

Simply put, you have to fight back and be persistent, Jensen says.

"Things have gotten to the point where consumers are unable to easily and rationally protect themselves," he says.