Is Automatic Installment of Your Credit Card Bill Illegal? Find Out What to Do!

If you've ever been surprised by an automatic installment plan applied to your credit card bill without your authorization, know that this practice may be illegal and that you have rights to challenge it.

What is automatic installment of your bill?

Some financial institutions, instead of charging the full amount of the bill, automatically split the outstanding debt into installments when payment is not made in full. This happens without the consumer choosing this option, resulting in high interest rates and an increase in the debt.

Why is this illegal?

According to Resolution No. 4,549/2017 of the Central Bank of Brazil (Banco Central), any installment plan must be authorized in advance by the consumer. In other words, the bank must inform the customer about the terms, interest rates, and amounts before carrying out the transaction. When this does not happen, the practice can be considered abusive and subject to challenge.

What are your rights?

To be clearly and transparently informed about any charge.

To cancel the unauthorized installment plan and demand a refund of the amounts charged.

To request double the amount improperly paid, as provided for by the Consumer Protection Code (Código de Defesa do Consumidor).

To seek compensation for moral damages (non-financial harm such as distress or reputational damage) if the improper charge causes financial losses or leads to your name being added to credit blacklists.

What should you do if this happens to you?

Check your bill: If you identify an improper installment plan, contact the bank immediately.

File a complaint: If you cannot resolve the issue directly with the financial institution, reach out to Procon (Brazil's Consumer Protection Agency) or the Central Bank.

Seek legal support: If the situation persists, a specialized lawyer can help you recover amounts paid improperly and ensure your rights are protected.

If you have been a victim of an automatic installment plan applied to your bill without your authorization, don't accept this charge without questioning it. You have rights and can seek reimbursement!