Beware of the Continuous Payment Authority!

Many people who borrow from Pay Day lenders, subscribe to certain websites or use certain cards unwittingly sign up to a Continuous Payment Authority also known as  Recurring Payments which is an unscrupulous means where lenders attempt to take money from your debit or credit card. So, what is a Continuous Payment Authority and how can we deal with it?

Continuous Payment Authority the Facts

Members of the Pay Day Loan companies trade bodies are obliged to make a determined effort to explain to their customers what a Continuous Payment Authority is,  if it is right for them plus ensure they know they have a right to cancel it if they so wish. The trade body also states that customers will be contacted three days before the lender attempts to take payment in this way by letter, phone, text or email.

Continuous Payment Authorities are not Direct Debits they simply allow vendors to take money from you whenever they judge you owe it to them. In short you have given them permission to take funds as and when they like. So, what has the Office of Fair Trading to say about this method? The OFT closed in April 2014 but prior to this they stated that lenders could not seek payment using this method if they know that the customer has insufficient funds in their account to cover the payment or that it would leave the customer with no money for essentials.

When lenders have been advised that a customer is in severe hardship financially they should not use the Continuous Payment Method to gain payment.  Matters dealt with by OFT can now be discussed with the Financial Conduct Authority or advice may be sought from the CAB.

Silence is Not Golden in this Case

Anyone who is experiencing difficulty paying a debt must not ignore the fact as silence will only exacerbate the situation. The first thing to do is contact the lender to let them know you are having trouble paying. The lender cannot harass you constantly and must make every attempt to contact you by all the usual methods.

Customers who ignore communications and do not inform the lender of their financial difficulty are merely giving the lender carte blanche to enforce the Continuous Payment Method in order to get what is owed. Borrowers who consider they are being treated unfairly may contact the Financial Ombudsman for advice.

How Can I Cancel a Continuous Payment Authority?

If you want to cancel a Continuous Payment Authority you can contact the lender to inform them you wish to do so. It is your legal right to cancel if you wish so don’t be fobbed off. The Pay Day Loan Company must act on your request straight away. Make sure that you ask for confirmation of cancellation in writing from them, while also keeping a copy of your original contract as proof of how much you agreed to pay them.

Card providers using this method must also adhere to any cancellation request. If they resist refer them to the 2009 Payment Services Agreement. If they still refuse to cancel complain in writing, while once eight weeks has passed you can then complain to the Financial Ombudsman. Disputed funds must be reimbursed. If a Card provider does not cancel the Continuous Payment Authority then you may claim additional costs.

You also have the right to ask your bank to cancel these agreements, while many bank staff is unaware that they are able to do so. If you ask them to cancel this agreement for you and they fail to do so you can reclaim these payments. Many banks are guilty of not cancelling these arrangements as requested asking the customer to contact the vendor directly which is not necessary.

What Kind of Companies Use this Method?

Typical companies who apply the Continuous Payment Authority include

  • Pay Day Loan Companies
  • Online Porn Subscriptions
  • Online DVD rentals
  • Gym memberships
  • Mobile Phone or TV subscriptions

Am I Eligible to Claim?

You are entitled to reclaim

  • If you tried to cancel a Continuous Payment Authority Payment from your card on or after November 2009
  • Your bank or card provider told you they couldn’t cancel it
  • You were told you would have to contact the vendor directly

You should get back any payments taken after the date you applied to cancel plus any interest charged

Can I Avoid This Method in Future?

Many subscription sites will not allow you to buy from them without you signing up to the Continuous Payment Authority. It depends how desperate you are to receive the goods or services of these people as to whether you go ahead. Legitimate companies probably won’t cause much hassle but avoid anything that looks remotely dodgy!

Try to sign up to Direct Debit payments if you can. Most companies have signed up to the Direct Debit method these days and at least you have the Direct Debit Guarantee to fall back on. Ask if you can pay by standing order or make a monthly payment transfer from your account. That way at least you are in control of sending the money.