If you take payments from customers using a series of automated payments from their debit or credit card, you need to make sure you’re doing so legally. The Office of Fair Trading (OFT) has issued a set of principles for businesses to follow amid concerns that customers are not always being made aware of what they are signing up to. Once agreed by a customer, a Continuous Payment Authority (CPA) allows a business to take a series of payments using a customer’s debit card or credit card without having to seek express authorisation for every payment. These can be used to collect renewal payments for things like memberships or subscription services and are a handy way for customers to pay. However, where they are used, customers should be fully aware of the commitment they are entering into and be able to cancel them without difficulty if they choose to. New principles have been issued by the OFT to make it clear to all businesses using CPAs what they need to do to ensure that they fully meet their legal responsibilities. These include : Being fully transparent about terms before a consumer signs up to a CPA arrangement Ensuring the consumer has given informed consent to the use of a CPA, and do not use ‘opt out’ provisions or other means to automatically assume the consumer has given consent Providing adequate notice of any changes to the scope of the agreed authority, such as the amount or timing of payments Providing clear and prominent information on how to cancel a CPA. The principles come after an investigation by the OFT into websites using CPAs, which checked for compliance with consumer protection laws. This found signs that traders are not making it clear to customers that they are being signed up to a CPA, or about their rights to cancel. The customer’s rights CPAs and direct debits are not the same thing, though they do offer the same guarantees. Customers can cancel a CPA with either the company taking the payment, or with the bank or card provider. Customers should tell the bank or card issuer that they have stopped permission for the payments. The bank or card provider has no right to insist that you agree this first with the company taking the payments, although it is good practice to also notify the company. For further advice on CPAs, visit the OFT website.
If you take payments from customers using a series of automated payments from their debit or credit card, you need to make sure you’re doing so legally. The OFT has issued a set of principles for businesses to follow.