Your rights when you pay by card with continuous payment authority

Your rights when you pay by card with recurring payment or continuous payment authority

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If you pay for something like a subscription or perhaps car insurance, and you use your credit or debit card, it’s quite likely you’ll end up agreeing to a continuous (or recurring) payment authority. How do you cancel payments?

What is a continuous payment authority?

A continuous payment authority lets a company take a series of payments from your credit or debit card without having to get your permission before it takes each individual payment. They are often used to collect renewal payments for things like vehicle breakdown services, insurance policies, gym memberships, online dating, mobile and broadband services or magazine subscriptions.

How can you cancel a continuous payment authority?

You can cancel a continuous payment authority with either the company taking the payment, or with the bank or card provider. Ideally, contact the company you’re paying first, and ask them to stop taking payments. If they don’t:

  • Tell the bank or card issuer that you have stopped permission for the payments.
  • The bank or card provider has no right to insist that you agree this first with the company taking the payments, although it is good practice to also notify the company.
  • If money continues to be taken from your card, you can insist that the bank refunds it under the Payment Services Regulations of 2009.

Do some people have a problem stopping payments?

The problem is that some people have signed up to use a continuous payment authority and have found that the company has continued to take payments even when they’ve cancelled the contract.

There are three main problems:

  • Problems cancelling continuous payment authorities. Continuous payment authorities were originally set up only to be cancelled by the company you are paying. The rules changed in 2009 with the introduction of new payment regulations, but some companies still ignore their customers’ wishes.
  • Problems with someone else’s card being used. There have also been problems with companies such as payday lenders that have taken payments from — for example — parents’ credit cards when they’ve used that card to pay off their son or daughter’s debt. The lender has then used the card for future payments.
  • Problems with payments being taken on dates different to those agreed. This was a historical problem with payday lenders (something that’s since been clamped down on by the regulator).

What the rules say

The rules were changed some time ago to say that businesses must spell out what’s involved in a continuous payment authority and what the company’s obligations are. It says businesses must:

  • Be fully transparent about terms before a consumer signs up to a continuous payment authority arrangement.
  • Ensure the consumer has given informed consent to the use of a continuous payment authority. They must not use ‘opt out’ provisions or other means to automatically assume that you have given your permission.
  • Provide adequate notice of any changes to the agreement, such as the amount they will take or the timing of payments.
  • Provide clear and prominent information on how to cancel a continuous payment authority.

The rules were changed after it emerged that companies weren’t making it clear to customers that they are being signed up to a continuous payment authority, or about their rights to cancel.

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