Know your rights about continuous payments

Many consumers have no idea what a Continuous Payment Authority (CPA) is – but plenty have unwittingly signed up for one and are discovering that getting out again is both difficult and confusing. 

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What is a CPA?

A CPA is a type of regular automatic payment, set up with a debit or credit card which is used to fund ongoing goods or services – for example regular deliveries of products such as face creams or contact lenses, a gym membership or magazine subscription.

A CPA is similar to a direct debit but consumers give a retailer permission to take payments from their card, rather than from their bank account. They also offer consumers less protection than direct debits as the timing and amount of the payment s of CPAs may vary.  And, just to confuse matters further, a CPA may also be called recurring payment authority, recurring transaction or recurring payment.

Cancelling your payments

Whatever name it goes under, you might want to stop the payment as you no longer require the goods or services. In this case it follows that you should call your bank and request for it to be cancelled, just like a direct debit.

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But recent research from watchdog Consumer Focus shows that banks’ customer service advisers are unclear of the rules around CPAs and could be giving customers incorrect advice as a result.

Its mystery shopping survey found that almost half of banks’ advisers (44%) gave the wrong answer or couldn’t give an answer, when asked how to cancel a CPA. Worryingly, 28% of customers were told they had to take their query to the company which had set up the CPA in the first place. But, not only is this is contrary to Financial Services Authority guidance, it can lead to more delays and confusion.

The result of this lack of clarity is that payments are all-too-often taken from a customer’s account without their knowledge or consent, claims Consumer Focus.

The truth of the matter is, your bank can and must cancel a CPA at your request and should also inform the supplier or retailer that the CPA has been cancelled.

Sarah Brooks, director of financial services at Consumer Focus said: “Consumers should be clear that they can cancel a CPA simply by contacting their bank. Ideally the customer should also contact the business involved – but crucially they do not need the company to cancel the CPA for them.”

She added that consumers will still need to pay any debt that is outstanding, but the company cannot require the customer to pay this debt through a CPA.

Consumer Focus also encourages any customer given the wrong advice about cancelling a CPA to log a complaint with the bank.

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