The Mail on Sunday launches a major campaign today to stop thousands of people falling into the ‘continuous payment’ trap.
This relatively new form of payment can result in regular sums being sucked out of your bank account, often for years.
Backed by leading consumer groups, we are now demanding that companies which set up these payments for a variety of services – everything from gym membership to access to a dating website – provide subscribers with full details about what they are signing up to.
Time for change: The Mail on Sunday launches a major campaign today to stop thousands of people falling into the ‘continuous payment’ trap
We also want companies to ask customers at least once a year if they want to continue with the service they are paying for.
And we want greater explanation given on bank or credit card statements about what the payment relates to and the authority’s next automatic renewal date.
By taking regular instalments from a customer’s debit or credit card, this payment method is proving a lucrative cash cow for many providers.
This is because many people are unaware that they are even making the payments – which can go on for ever unless you remember to cancel. Firms also use them to sneak in price hikes without the customer ever being aware of the new higher price.
Our campaign has the support of consumer group Fairer Finance. It believes customers should not only be written to when a continuous payment comes up for automatic renewal, but that they should also receive a text.
Demand: The Mail on Sunday wants companies to ask customers at least once a year if they want to continue with the service they are paying for
It also believes all customers should be contacted if prices are raised with the option given to cancel the payment if they object.
James Daley, founder of Fairer Finance, says: ‘Many people often like to pay by debit or credit card – so the continuous payment option should not be taken away.
‘But people need to be better notified. Many forget they are signed up to such deals – or get tricked into them with a ‘free’ subscription that then results in regular monthly charges unless they cancel.’
Last month, we highlighted how many dating agencies get extra cash from lonely hearts by encouraging them to sign up to their services with long-term ‘auto-renewals’ that often never get cancelled.
The Mail on Sunday’s vital demands
– All companies using continuous payment authorities should be required to contact customers ahead of the plan’s automatic renewal date – giving them the option to cancel.
– This right to cancel should be sent at least 30 days ahead of the renewal date – providing plenty of time for consumers to act.
– This cancellation option should be offered by both text and email – and letter if the original agreement was set up offline.
– Payments should be clearly identified on credit card or bank statements as is the case with direct debits and standing orders.
– Payment details on statements should include the renewal date – flagging up the fact that unless the payment authority is cancelled ahead of this time, the payments will continue.
– When first signing up to a continuous payment plan, a consumer should be required to sign or tick a box acknowledging that the payment will auto-renew unless cancelled.
Since we reported on this issue, we have been inundated with correspondence from readers who have fallen victim to this payment method for a wide range of services – from social network clubs to car breakdown cover.
The reason why companies are keen to sign people up to a continuous payment authority is that money is regularly taken from a credit or debit card without further permission being required.
It enables firms to pickpocket customers for a monthly fee that is automatically renewed without the person’s explicit permission.
Such contracts enable providers to hike up fees, often without the person paying noticing. Unlike direct debits and standing orders, the payments are not clearly marked on bank statements.
Support: The Mail on Sunday’s campaign has the support of Fairer Finance
TV director Phil Jones, not his real name, says he was tricked into taking out a continuous payment authority this year – leaving him £80 out of pocket.
The 56-year-old from Highbury in North London says: ‘It is unethical that a company that signs you up to using this payment system can renew the subscription after a year without telling you – and then help itself to more of your money even if you do not wish to continue. They are taking advantage of a legal loophole that must be closed.’
Phil paid £80 to join media networking company ProductionBase for a year – hoping it would lead to some new job opportunities. After it failed to do so, he decided not to renew the annual subscription in January, but ProductionBase decided to help itself to another £80.
Phil says: ‘There was an option to cancel my membership but nothing about stopping the renewal. I expected to be asked if I wanted to continue. This payment scam should be outlawed.’
Robert Lester is another victim. He only discovered he was paying £53.99 a month as a ‘premium’ member of business networking website LinkedIn when he read his last credit card bill.
He says: ‘I have used LinkedIn very little and assumed the service was free. I do not know how it happened – perhaps I made a genuine mistake – but no guidance was then offered on how to cancel future payments.’
Saga: When Sanchez Manning wrote off her £1,600 Citroen Furio car two years ago she thought that the breakdown cover that came with it was cancelled
He was unable to get hold of LinkedIn to query the payment but managed to cancel future payments by contacting his credit card provider.
When Sanchez Manning wrote off her £1,600 Citroen Furio car two years ago she thought that the breakdown cover that came with it was cancelled.
The 40-year-old journalist from Sheen in South West London says: ‘In January, I noticed £160 disappear out of my bank account. It was for AA breakdown cover even though I have not owned a car for two years. It was nuts.’
She says: ‘The firm claims it wrote to me but I must have missed it as a result of all the junk mail I receive. The AA eventually refunded the subscription fee.’
The Financial Conduct Authority regulates continuous payments. Six years ago, it discovered that some banks were failing to cancel continuous payment authorities when asked to. It threatened the banks with fines unless they cleaned up their act.
Clive Adamson, a director at the regulator, says: ‘Some customers have struggled with their bank over continuous payments and we have made it clear that this is unacceptable. Customers can finally be confident that when they ask for a continuous payment authority to be cancelled this will be done.’
But cancelling a payment does not mean you will get a refund for money that has already gone out – and you may still be liable for future payments if you have agreed to this when signing a contract.
As a courtesy – and further check – tell both the service provider and card issuer when stopping payments. If a continuous payment authority has not been cancelled despite your request, contact the Financial Ombudsman Service via website financial-ombudsman.org.uk or call 0800 023 4567.
While the banking trade body UK Finance admits it would be possible to highlight continuous payment authorities better on bank statements, it is not keen to take responsibility. A UK Finance spokesman says: ‘Consumers often value the way continuous payment authorities are easy to set up.’
Tim Dawson, a director at ProductionBase, says: ‘If you wish to subscribe to our service you must be signed up to payment systems PayPal or Worldpay. If you do not wish to renew a subscription contact us directly or through these payments services.’
An AA spokesman says: ‘You can contact us any time during the policy period to request we do not auto-renew and we send a reminder six weeks before renewal where there is an opportunity to cancel it.’
Despite being valued at £20billion by its owner Microsoft, LinkedIn does not provide any UK phone number – and failed to respond to our request for a comment.