We’ve used authorize.net for handling payments and subscriptions for our software company since 2009. In October 2017 I turned on their account updater feature which updates expiring credit cards with the new card number or expiration number so the subscription stay active. Instead of updating active subscriptions like is supposed to happen, Authorize.net re-activated cancelled subscriptions. Their mistake increased our chargeback rate by 500% in one month. Our chargeback rate skyrocketed so high our merchant account was shut down and now we cannot get another merchant account to process the subscriptions because the previous merchant account’s chargeback rate was so high. Authorize.net told me they have no way to reverse their mistake. Each card thats updated costs 25 cents, when I requested a refund for the fees Authorize.net denied my request.
Even one of Authorize.net’s customer support people stated this was a violation of PCI compliance rules. So it doesn’t make sense they want to charge us for something they agree is against processing rules and also against the law
On November 7, 2017 we were charged $5,385.90 for this feature.
When I saw how high our chargeback went and we started getting complaints about customers subscriptions being reactivated and charged after they were canceled I turned off the account updater feature on November 27. Unfortunately Authorize.net charged us again on December 4 for this feature that was turned off and updated even more cancelled subscriptions. Below are the charges they placed on December 4, after I cancelled the account updater feature on November 27:
I emailed authorize.net on December 4, 2016 asking for a refund. On December 6 I received a response that did not answer my question. On December 6 I asked for a supervisor, the supervisor called Melissa responded on December 7 and stated they are aware of the problem with Authorize.net updating canceled subscriptions but won’t fix it or refund our fees.
Their error, that they claim they know about, is illegal and a violation of Visa/Mastercard rules. You cannot reactivate customers subscriptions after they cancel them, that is not legal to charge customers when they canceled their subscription and don’t authorize the charge. Their mistake cost us six figures in losses, so the very least they can do is reverse the fees they charged us for their mistake.
Authorize.net has a terms and conditions that are required to authorize before turning on the feature, but nowhere in their terms do they state they will reactivate cancelled subscriptions, so I never agreed for this to happen as its not legal.
I disputed the $6,497.63 in charges for the account updater feature with my credit card company and we won our dispute.
I filed a complaint with Mastercard and they opened an investigation.
I filed a complaint with the Utah Attorney General and they agreed its illegal, but they only investigate claims filed by consumers, not by businesses, so they did not open an investigation for that reason alone.
After we won our credit card dispute, Authorize.net sent our account to a collection agency. Now the collection agency is emailing our companies employees stating they are going to put the matter on consumer and business credit reports and want us to pay $6,497.63 in charges for something that Authorize.net, the Utah Attorney General and Mastercard all agree are illegal charges. The collection agency hasn’t responded to our disputes regarding their alleged debt claims and Authorize.net only tells me to contact the collection agency