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Fraser Sutherland, Policy Officer
Many of us will have encountered the banner or social media adverts shouting about great FREE TRIALS of the latest miracle cream, slimming product or health boost. But did you know that behind many of these "freebies" is a little known payment system that has full and easy access to your bank account? Meet the Continuous Payment Authority (CPA).
Never heard of it? Well you're not alone, of over 1,000 Scots that we asked with the help of YouGov, 75% had no idea how a CPA worked or how if differed from a Direct Debit. Amazing when you think over two million Scots set one up in the last year.
Most of us will be familiar with Direct Debit payment. Many of us use Direct Debits to pay for recurring payments like energy bills, charity donations and mobile phones. With a Direct Debit you are covered by a guarantee from your bank, if they make a mistake they have to refund you. Also you can review all your Direct Debits through online banking or by asking your local bank staff for a print out.
But with a CPA you don't have these protections. There is no guarantee nor is there any easy way to see what is active on your account. Scary stuff.
So how on Earth does a CPA get active on your account? Well as ever it comes down to the small print. When you sign up to a free trial or a subscription with your debit card you are agreeing to a recurring payment being taken from that card. Remember ticking that box that said you agreed to the terms and conditions? And did you read them? Even if you did, the chances are you faced a maze of legalistic and confusing language and just gave up. And the worst part of a CPA? The company with your details can change how much money they take from your account, and take it as often as they like.
Take Jane as an example. Jane phoned our consumer helpline after she noticed a whopping £85 disappear out of her account to an unknown company. Jane thought her debit card had been cloned and wanted our advice about how to contact her bank and stop it happening in the future. After investigation by our experts the company turned out to be a beauty firm. Jane had signed up to a free trial with them for a new face cream online. She had paid her £3 postage and packing to get the "free" cream on her debit card. But little did Jane know she had agreed, in the small print, to the firm sending her a tub of cream every month for £80! As Jane told us later: "It wasn't even that good stuff, it was just basic moisturiser."
Stewart also knows how it feels to have money whipped out his account by a CPA. He came to his local CAB after getting fed up of his bank refusing to cancel a CPA on his account for a service he never wanted. Like Jane he had "agreed" to a subscription for diet pills after seeing a "free trial" offer on social media. Stewart had been trying to loose weight for some time and was open to trying these "miracle" Raspberry Keytone tablets that he had read about in the paper. Happy at first with the tablets he was sent, Stewart was surprised when another tub arrived just two weeks later. After a third set hit his doormat in as many weeks Stewart got suspicious and checked his online banking. To his horror three payments of £65 had been taken from his account. He tried to contact the company but like a quarter of people who took our survey they didn't respond. He then went to his bank who like 30,000 other Scots with the same issue last year was told they couldn't cancel it. Thankfully, by going to his local CAB he got the facts from our expert advisers and found out that he did have the right to cancel at his bank.
Jane and Stewart are not alone. Around 1 million Scots last year had reason to cancel a CPA. Some of these of course will be legitimate cases, where people signed up knowingly and then simply changed their minds. But we know from the number of clients we help on the subject that many thousands of Scottish consumers are being duped into subscriptions they didn't want, and losing money in the process.
We've been working with our CAB colleagues in London and have published a full report on all our findings about CPA's, the companies that use them and what the banks are doing to protect your account. We want it to be easier for consumers to cancel CPA's, and we have called on the Financial Conduct Authority to make sure the banks play fair. We are also calling on social media firms and websites that advertise these companies to take them down when they get complaints, and of course the subscription companies themselves must make it clearer that people are signing up to a subscription in the first place.
If you think you may have signed up recently to a subscription online and you’re not sure whether it contained a CPA, check your bank statements carefully to see if the money is still going out. If it is, talk to your bank immediately and tell them to cancel the CPA. If they say they can’t do this, tell them they are wrong. And if you do find you have been duped, make sure you report the company to trading standards through our consumer helpline. And remember you can get free expert confidential advice on all of this from your CAB service – either at your local CAB, or through our consumer helpline 03454 04 05 06 or have a look at our help online.