CANCELLING RECURRING CARD PAYMENTS
Your rights to cancel a regular payment on your credit or debit card have been
clarified recently. You now have the right to cancel any agreement you made for
a retailer, hotel, gym, lender, technology provider – in fact anyone – to take
money in future from your debit or credit card.
In some cases people are duped into giving a firm the right to take money
regularly. They sign up online to buy a product only to discover a month later
that they agreed to be sent things every month and pay a hefty subscription.
Such firms can be very reluctant or slow to end the payment.
Now you can just tell your bank or card provider and they must stop all future
payments. If they don’t they have to give you back any payments they make and
compensate you for any losses such as overdraft charges.
In the past your bank could not – or would not – stop these recurring payments
(also called ‘continuous payment authorities’). Customers were told they had to
go to the firm they did the deal with as only it could stop the payment. But a
law passed on 1 November 2009 means that the bank or card provider must stop
them with or without the agreement of the firm that takes them. The law applies
to all such payments not just ones which have been made without your full
understanding.
The new law originated in Europe and for a couple of years all sides argued
about what exactly it meant. But the Financial Services Authority has issued new
guidance which makes it absolutely clear that the bank or card provider has to
stop the payments from the moment you tell them to. Its latest guidance for
customers on these recurring payments says
“you have the right to cancel them directly with your bank or card issuer by
telling it that you have stopped permission for the payments. Your bank or card
issuer must then stop them – it has no right to insist that you agree this first
with the company taking the payments.”
Nevertheless, most banks and card providers are still giving customers the wrong
information and telling them they must cancel the arrangement with the firm. So
you may have to be firm and quote the FSA guidance and the law itself which is
reg.55 of the Payment Services Regulations 2009.
Because the law was passed in the UK on 1 November 2009 you can get compensation
for past payments if you told your bank to stop a payment after that date and it
refused to do so.
Full details, including how to claim money back, are in my blog
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