Charged by standing order after canceling a subscription: revoking the bank authorization and the refund

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What is the difference between canceling the subscription and canceling the standing order?

These are two separate arrangements. The first is the transaction itself, with the dealer. A subscription is a “continuing transaction” (section 13C(a) of the Consumer Protection Law, 5741-1981). You cancel it with a cancellation notice to the dealer in one of the ways in section 14I(a). These are: orally (by phone or at the place of business), by registered mail, by email, or by fax if the dealer has one. In a transaction that can be made online, you can also cancel online. The contract ends within three business days of delivering the notice. If you sent it by registered mail, it ends within six business days of the day it was handed in for sending. A later date that you stated in the notice applies instead. From then on, the dealer may not charge for a service provided after the cancellation date (section 13D(c)).

The second is the means of collection, with the bank. In the words of the law, a “standing order” on a bank account is a “debit authorization”. The payer gives this authorization to the bank that manages their account (in the words of the law: the payer’s payment service provider). It allows the bank to make a payment from the account at the payee’s request, subject to the conditions set in the authorization. This is the definition in section 1 of the Payment Services Law, 5779-2019, and section 1 of the Consumer Protection Law adopts it. The Bank of Israel describes the method this way. The payee presents a charge under an authorization the customer gave. The customer’s bank account is then debited, and the payee’s account is credited (section 1 of the introduction to Proper Conduct of Banking Business Directive 439).

In practice, canceling the authorization at the bank stops collection from the account. But it is not a cancellation notice given to the dealer under section 14I(a). It also works the other way round. A cancellation notice to the dealer does not necessarily cancel the authorization at the bank. It does so only if you wrote in it expressly that you are also canceling the debit authorization (section 34(a) of the Payment Services Law). So send both notices.

How do you cancel a standing order, and when does the cancellation take effect?

The payer may cancel a debit authorization at any time (section 34(a) of the Payment Services Law). They do so by notice to the bank, or by notice to the dealer who is the payee. If the bank received the notice, it informs the dealer as soon as possible and no later than two business days. If the dealer received the notice, it also informs the bank within the same period. Once the notice is received, three things follow, no later than one business day (section 34(b)). The dealer will no longer request a charge under the canceled authorization. The bank will not make a charge under it. And the payer will not bear any cost arising from such a request.

Accordingly, Proper Conduct of Banking Business Directive 439 of the Supervisor of Banks says the customer may cancel their authorization at any time by notice. The cancellation takes effect one business day after the notice is given to the bank (section 8(a)–(b) of the Directive). Under the same Directive, the customer can get a “report of authorizations to debit an account” from the bank at any time. It lists the authorizations on the account, the name of the payee and the details of the last charge under each of them (section 6A(i) and Annex B of the Directive). The report helps you find the right authorization before you cancel.

One more rule: some debit authorizations are not valid (section 34(c) of the Payment Services Law). This applies to an authorization that has not been used for 24 months. The period runs from the date it was approved or from the date of the last charge under it, whichever is later.

Already charged? Canceling a specific charge within 3 business days

You can cancel a specific charge made under a debit authorization by notice to the bank. The notice must be given no later than three business days after the charge. The bank returns the amount of the charge, at its value on the day of the charge. It does so within one business day of the notice (section 35(a) of the Payment Services Law). The Minister may set types of authorizations, and conditions, in which a payer cannot cancel a specific charge (section 35(b)).

Canceling the charge at the bank does not decide the dispute with the dealer. Directive 439 makes clear that the bank bears no responsibility toward the customer for the transaction between the payee and the customer (section 4 of the introduction to the Directive). So three business days may have passed, or the dealer may claim it is owed the charge. Then claim from the dealer itself what it collected for the period after the subscription cancellation date (section 13D(c) of the Consumer Protection Law).

The bank charged you after you canceled the authorization: what do you do?

After the authorization is canceled, the bank may not make a charge under it (section 34(b)(2) of the Payment Services Law). Under Directive 439, the customer may require the bank to cancel a charge made under an authorization that was canceled. Did the bank charge the account despite the cancellation? Then it returns the amount of the charge to the customer, at its value on the day of the charge (sections 7(b) and 8(c) of the Directive).

The Payment Services Law also sets a general rule for a charge that goes beyond the authorization. This includes three kinds of charge. A charge under an authorization that has expired. A charge for more than the amount allowed in the authorization. And a charge on a date different from the one set in it. The bank returns the difference no later than one business day from one of two dates, whichever is earlier: the date it discovered the deviation, or the date the payer notified it (section 37). You may also have been charged under an authorization for an amount beyond what you could reasonably have expected, given the previous charges. Then the bank returns the amount within seven business days of your notice, subject to the exceptions in the section (section 38).

The subscription is paid by credit card: what is different?

Directive 439 does not apply to authorizations to debit an account by a debit card (section 11 of the Directive). A debit card (כרטיס חיוב) is the legal term that also covers credit cards. The recurring charge may go through a credit card. Which of the rules in the Payment Services Law apply then depends on how the arrangement was set up. So it is worth checking this with the credit card company. Under the definition in the Law, a “debit authorization” is an authorization to carry out a payment transaction at the payee’s request (section 1 of the Payment Services Law). The payment can come from the payer’s payment account or “by means of the payer’s payment instrument”. So if the recurring card charge was given as a debit authorization, you can cancel it at any time (section 34(a)). You do so by notice to the body that issued the card or to the dealer. Some card charges you did not make, or their amount was increased without authorization. These are covered in the guide An unauthorized charge on a credit card.

What does not change is the dealer’s duty. The contract ends under section 13D(c) of the Consumer Protection Law. From that moment, the dealer may not charge for a service provided after the cancellation date, by any means of payment. Blocking the card or contacting the credit card company is not one of the ways of giving the dealer a cancellation notice under section 14I(a). So it does not replace that notice.

What can you claim from the dealer?

The dealer was not allowed to collect a charge for the period after the cancellation date. You can claim it back (section 13D(c) of the Consumer Protection Law). Take a continuing transaction where the dealer charges the account under a debit authorization. If you claimed it collected too much, the dealer must look into the claim within ten business days. If it finds that it overcharged, it must refund within four business days, plus interest and plus a payment for your expenses. It must send a reasoned written reply within 21 business days of the day you contacted it (section 13D1).

In a continuing transaction, continuing to charge after a cancellation notice breaches section 13D(c). For this violation, the court may award exemplary damages (statutory damages) without proof of damage (section 31A(a)(2b)). The same applies to not refunding an excess amount under section 13D1 (section 31A(a)(2b1)). Before a claim for exemplary damages, a written request is needed. For continued charging after cancellation, the cancellation notice itself is enough, if it was not given orally (section 31A(b)). The full steps, in order: Charged after canceling a subscription? 5 steps to get a refund.

What are the deadlines in the law, and who is each one with?

The table brings together the deadlines in the Consumer Protection Law and the Payment Services Law. It does not replace the wording of the law, and in every case it is worth checking the circumstances.

What to write in the notices, and what to keep

• To the dealer: your name and ID number (section 14I(c) of the Consumer Protection Law), and a statement that you are canceling the transaction. If payment is by standing order, add that you are also canceling the debit authorization (section 34(a) of the Payment Services Law). Full text: Canceling a subscription: a full checklist + wording for a cancellation notice.
• To the bank: a request to cancel the authorization, with its details as they appear in the report of authorizations to debit an account (the name of the payee and the institution code).
• What to keep: the cancellation confirmations from the dealer and from the bank. Also keep the account statements showing the charges made after the cancellation date.

Frequently asked questions

I canceled the standing order at the bank. Is the subscription canceled?

Not necessarily. Canceling the authorization at the bank stops collection from the account (section 34 of the Payment Services Law). But it is not a cancellation notice to the dealer in one of the ways in section 14I(a) of the Consumer Protection Law. For the continuing transaction to end under section 13D(c), also send the dealer a cancellation notice that includes your name and ID number (section 14I(c)).

How soon does the cancellation of a standing order take effect?

Once the cancellation notice is received, the bank will make no further charge under the authorization. The dealer will not request a charge under it either. This applies no later than one business day after the notice (section 34(b) of the Payment Services Law). Proper Conduct of Banking Business Directive 439 of the Supervisor of Banks at the Bank of Israel deals with timing. The cancellation takes effect one business day after the notice is given to the bank (section 8(b) of the Directive).

I was charged before I managed to cancel. Can the charge be canceled?

You can cancel a specific charge made under a debit authorization by notice to the bank, no later than three business days after the charge. The bank returns the amount, at its value on the day of the charge, within one business day of the notice (section 35(a) of the Payment Services Law). Have three business days passed? Claim from the dealer what was collected for the period after the subscription cancellation date (section 13D(c) of the Consumer Protection Law).

The bank kept charging after I canceled the authorization. What now?

Under Directive 439 of the Supervisor of Banks, you can require the bank to cancel a charge made under an authorization that was canceled. Did the bank charge the account despite the cancellation? Then it returns the amount of the charge at its value on the day of the charge (sections 7(b) and 8(c) of the Directive). The payer will not bear any cost arising from a request for a charge under a canceled authorization (section 34(b) of the Payment Services Law).

The subscription is paid by credit card. Are the rules the same?

Not necessarily. Directive 439 of the Supervisor of Banks does not apply to authorizations to debit an account by a debit card (section 11 of the Directive). A debit card (כרטיס חיוב) is the legal term that also covers credit cards. What does not change is the dealer’s duty. The contract ends within 3 business days of delivering the cancellation notice, or 6 business days by registered mail. From then on, the dealer may not charge for a service provided after the cancellation date (section 13D(c) of the Consumer Protection Law).

The dealer kept charging after I canceled. What can I claim from it?

First, the refund of what was collected for the period after the cancellation date. From that date, the dealer may not charge (section 13D(c) of the Consumer Protection Law). Continuing to charge after a cancellation notice is also a violation for which the court may award exemplary damages, without proof of damage. The ceiling is NIS 10,000. For a repeated or continuing violation, or in aggravated circumstances, it is NIS 50,000 (sections 31A(a)(2b) and 31A(c)). An individual can file a claim of up to NIS 39,900 (2026) in the Small Claims Court.

How long does the bank have to tell the dealer that I canceled the authorization?

The bank that received the notice informs the dealer as soon as possible and no later than two business days. If you gave the notice to the dealer, the dealer informs the bank within the same period (section 34(a) of the Payment Services Law). This does not delay the end of the charges. No charge may be made under the authorization later than one business day after the notice is received (section 34(b)).