Continuous Payment Authority
A Continuous Payment Authority, or CPA, is a mechanism to provide regular payments to a business to pay for its services. There is some controvesy over their use. You should also be aware of direct debit scams.
This page has the following sections:
- opt out
- unscrupulous businesses
- Internet porn sites
- how to stop getting caught out
- how do you stop a CPA?
- further reading
The payment method known as a Continuous Payment Authority is one that allows businesses to take money from you on an continuous basis. A Continuous Payment Authority is also called a Recurring Transaction. In effect you give the company permission to take money from your bank account, often every month. We live in a free country, and if you tell a business that they can take a regular payment from you in return for their services then what is wrong with that? If you subscribe to a magazine, for example, this is exactly the service that you want.
It is not just monthly payments that may be set up this way, but also annual payments. For example you may agree to have your car's breakdown assistance premium repaid automatically so you don't have to worry about the renewal. Rather than setting up a direct debit the company may ask you whether you agree to this or not. More likely they will tell this this is what will be done -- for your peace of mind, of course -- and tell you that you need to inform them if you don't want them to do this. In this case you need to set up a diary entry on your computer to remind you to cancel it (if that is your wish) the following year.
For an unscrupulous business CPAs can be an easy way to make money. But remember it starts with you giving them permission, so be aware of what you are allowing and to whom. For example, you may get a free offer for some service, but in order to take the offer up you have to give someone your credit card detals. In the small print it may say that you agree to continue to pay for this service every month until you write to them to cancel it. You have, in this case, then given them permission to take money from you. To stop it write to them.
But what if there is no address -- this is one of the things you must check before sending your credit card details. The credit card company cannot help you because you have agreed to the payments -- it was in the small print. So make sure you know what you are signing up to. As always, the golden rule is if in doubt, don't send your details.
You cannot cancel a Continuous Payment Authority, only the company that has set it up can. Because of this in the wrong hands these agreements are far more dangerous than direct debits. With a direct debit the company has to agree to a code of practice; there is no such code of practice for a Continuous Payment Authority.
Internet porn sites
Of course if you sign up for a service from an Internet porn site you are very likely not going to be willing to talk to anyone about it. As they know this, this is one business sector that has been known to use CPAs as a very nice income stream.
It is not just Internet porn sites. Automatic insurance renewal has been mentioned above, but Sky TV, for example, is another company that uses this system. However the difference with these companies is that they have a clearly printed business address, so it is possible to write to cancel these payments if that is your wish.
How do you stop getting caught out?
You need to take a bit of care when deciding to spend your money online. Follow these steps to reduce your risk of getting caught out with CPAs:
- Always check there is a contact address for the compnany. Note that a phone number may not be enough, as it can be difficult to leave them a message. Also, the number may have changed in the meantime.
- Always read the small print to see what it says about payment commitments.
- If it is a free offer -- think: is this free so they can scam you for a CPA? The normal advice applies; if the offer seems too good to be true, it is too good to be true.
How do you stop a CPA?
Because this is an agreement between you and the company, you have told the company to take the amount out of your account every month. So you need to tell the company to stop this. However there are still very many Internet sites that do not publish their business address on the website, meaning you have no address to write to. In this case you should write to the bank or credit card company that holds the account from which you are paying, and explain to them that you have been unable to get in touch with the company to prevent payments. To quote from the FSA website:
"In most cases, regular payments can be cancelled by telling the company taking the payments. However, 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."
In the final event you can contact the Financial Ombudsman to complain. If you have all the evidence of your attempt to contact them this will help your case.