Two million people across Great Britain have experienced problems cancelling recurring payments which are often used for buying products online like e-book subscriptions or video streaming, finds a new report from Citizens Advice.
The study, Locked In: consumer issues with subscription traps, which includes evidence from Citizens Advice and Citizens Advice Scotland, also reveals that people are often signed up to these type of recurring payments – also known as Continuous Payment Authorities – without their knowledge.
People taking up offers for free trials of slimming pills or discounted beauty treatments find regular payments are taken from their credit or debit card without their apparent authorisation.
Details of the ongoing payments can be hidden within the terms and conditions. Sellers often get hold of a customer’s debit or credit card details by asking them to pay for postage or packaging.
Four in five people who had a problem with unwanted recurring payments didn’t realise they had signed up to the payments until money was taken from their accounts, finds a Citizens Advice survey of 500 people. A typical payment was worth £80 but some customers lost hundreds of pounds if they didn’t manage to cancel them quickly.
According to the UK Cards Association customers can cancel recurring payments with their seller or with their credit or debit card issuer. But Citizens Advice finds that many customers have difficulties getting these payments cancelled.
Eight per cent of adults across Great Britain who have ever tried to cancel a repeat service or subscription had their request refused by their bank or card issuer or by the seller, according to a survey of over 2,000 Great Britain adults carried out by YouGov for Citizens Advice.
Of the 500 respondents to the Citizens Advice survey who had a problem with recurring payments:
Just one in eight (12 per cent) of those who asked their card issuer for a refund got all their money back.
36 per cent had difficulties getting their bank or card issuer to cancel the recurring payments.
One in four (25 per cent) contacted their seller but the seller refused to stop charging them.
A quarter (24 per cent) were unable to contact the seller.
Over half (53 per cent) said they didn’t know they should be able to cancel recurring payments with their seller or credit or debit card issuer.
Citizens Advice is calling on credit and debit card issuers to notify customers when a recurring payment is taken. This would give customers the option to cancel or dispute the payments.
Citizens Advice Chief Executive Gillian Guy said:
“People are trapped into losing hundreds of pounds because they can’t cancel payments.
“All too often card companies and sellers are standing in the way of people ending recurring payments because they wrongly refuse to cancel. In some cases misleading advertising has meant people didn’t know they had signed up to payments which were buried in the small print.
“Credit and debit card issuers can help their customers to protect themselves by warning them when recurring payments appear on their accounts.
“As the Government launches a review into terms and conditions in consumer contracts there is an opportunity to make much clearer to people the exact amount they will have to pay when they are signing up to recurring payments.”
Citizens Advice Scotland’s consumer spokesman Fraser Sutherland said:
“Around 1 million Scots last year had reason to cancel a recurring payment. Some of these of course will be legitimate cases where people have simply changed their minds, but we know from the number of clients we help on the subject that many thousands are being duped into subscriptions they didn’t want.
“Today’s report details all our findings about recurring payments, 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 recurring payments and we have called on the Financial Conduct Authority to make sure 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 the subscription companies themselves must make it clearer that people are signing up to a subscription in the first place.”