Legal Question in Consumer Law in New Jersey

Legality of changing the amount authorized on credit card purchase

Hello there, I just recently bought a car insurance policy from Geico online. After filling in all of the information I received a quote of $146 first payment to start the policy, which I entered credit card information to pay. (upon review of the information of course.)

Shortly thereafter they informed me that upon review they had increased the initial payment to $187. They said that if the rate change wasn't over 20% they just put it through.

My question is if it's legal to take payment over and above what I had authorized without even being in contact with me. (An email and a voicemail was left but I was away from the phone at the time.)

I was rather surprised to learn they could do that, and I was curious as to the legal part of it. Thank you in advance.


Asked on 7/19/07, 1:26 pm

1 Answer from Attorneys
John Corbett Corbett Law Firm LLC

Re: Legality of changing the amount authorized on credit card purchase

It is not strictly legal and therefore the increased amount is not enforceable. However, the practice is good business for a number of reasons.

I am guessing that the terms of the offer make a final premium subject to confirmation by the insurer. That gives them time to research your driving record, etc. and let a human look at the record. Apparently they thought that a higher premium was appropriate and could be charged under the agreement. In that case, I expect that you can also reject the deal and cancel out altogether. However, if the insurer simply cancelled, you both run the risk that you would be uninsured and not know it. So, the way they did it is good business for both of you. If you don't like the new price, just cancel. The most they can charge you is the pro-rated time at the price that you agreed to. If you decide to cancel though, do it soon. A delay would probably obligate you to the new price.

See also: http://info.corbettlaw.net/lawguru.htm

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Answered on 7/19/07, 2:18 pm


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