Repeat payments not made clear according to Office of Fair Trading

Showing concern for consumers

The OFT has today issued a set of principles for businesses using continuous payment authorities (CPA’s). The concern is that many traders are failing to make clear to customers that they are being signed up for recurring payments.

Once agreed by a customer, a 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.  The OFT claims many consumers are unaware of their cancellation rights. As a result it has set out principle guidelines it believes businesses should apply.

For example, businesses should be fully transparent about terms before a consumer signs up to a CPA arrangement. Furthermore, it must ensure 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 such as the amount or timing of payments as well as clear and prominent information on how to cancel a CPA is also suggested.

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