Prevent unwanted subscriptions on your card

By Marianne Curphey

One of the most common complaints to credit card companies is about "free trial" offers that turn into monthly subscriptions. With details buried in fine print, consumers often don't realize they've signed up for an ongoing contract until the first time their account is charged.

When you enrol in such a subscription, you are actually signing up for a continuous payment authority (CPA) that allows the merchant to withdraw cash from your account every month until you cancel. CPAs are also common with mobile phone contracts and gym memberships that boast "one free month". CPAs can only be set up on debit or credit cards.

The Citizens Advice Bureau (CAB) details one example of just how these schemes can cost consumers in its report, "Alarm Bells Briefing: Sliming Pill 'Free Trial' Scams".  Between 2012 and 2014 the CAB's consumer service helpline saw a 710% increase in complaints about traders of slimming and health supplements taking money from people's accounts without their informed authorisation.


It says that in the six months to October 2014, callers to the Citizens Advice consumer service helpline lost £465,000 to slimming pill "free trial" scams, and on average each caller lost £150. The CAB estimates that consumers in England, Wales and Scotland may have lost more than £1 million to this scam just in the first three months of 2014.

What you can, and should, do
The Financial Conduct Authority (FCA) has said that when a consumer asks their bank to stop a recurring payment, the agreement should be cancelled. It also states that if another payment is taken, the money
should be refunded immediately. However, the CAB says the onus is still
on consumers to make sure they are not unwittingly signing up for a
CPA, and to take steps to cancel subscriptions as soon as possible.

"We can put a stop on future payments but if the contract is still ongoing
then you potentially have fees and charges accruing based on the deal that you signed up to," says Kerry Mezini, service improvement manager
at RBS and NatWest. "Unfortunately, because of the nature of the terms and conditions, we are often not in a position to refund the first payment that has been taken; it depends on the circumstances. You need to check what the cancellation policy is that you might inadvertently have signed up to."

"You can cancel the CPA through your bank up to the day before payment is due to be taken, rather than going direct to the retailer," says a spokesman for the UK Cards Association. "However, it is often easier to go to the retailer because they are people that you originally signed up with."

Most importantly, you should read all fine print before you agree to any purchase online, as some companies are still hiding clauses in lengthy agreements. However, this could be a challenge.

RBS and NatWest say they have found instances where the terms and conditions only appear after the customer has agreed to them. Or they are hidden at the bottom of the page or greyed out, making them hard to find.

"Some websites we see make you tick ‘I agree' before the [terms and conditions] are presented to you," Mezini says.

Because of this, in June 2014, the Consumer Contract Regulations came into force, replacing the Distance Selling Regulations and offering protection to consumers who buy online. Merchants are obliged to give consumers certain information. For instance, there must now be a box for customers to tick to say they agree to further payments. If you aren't made aware of further charges, you will not be liable for them.

However, consumers tend to skim over terms and conditions -- if they read them at all -- and the information is still hidden in the small print or in hard-to-decipher phrasing. Many people still end up missing the part that says the "free trial" ends after a month and a paid subscription will begin.

Banks, card providers are taking a stand
Banks and card providers are aware of the growing problem. Mezini says the bank has taken steps to tackle the growing problem after a huge number of complaints from customers.

"[In 2014] at RBS and NatWest we were made aware that this was happening because we were getting a crazy amount of customers calling in every day on this issue -- it was nearly 400 people a day," she says.

RBS and NatWest have raised the issue with Visa, MasterCard and The UK Cards Association, and have provided details on merchants causing regular complaints. Since August 2014, this information has led to more than 1,000 of these companies having their acquiring bank relationship terminated, leaving them unable to process payments.

See related: Skip the fine print, skip vital information, 'Buy now, pay later' offers can leave you with debt headache

Published: 9 April 2015