Beware the Continuous Payment Authority (CPA)

I would wager that many of you who have discovered this post without actually doing a Google Search for a ‘Continuous Payment Authority’ have no idea what they are. I also had no idea what they were until I fell foul of them.

About this time last year I purchased a Christmas gift for my wife from a service that provides a monthly beauty box which the recipient can tailor so it seemed an ideal gift. I did not take a great deal of notice of the terms and conditions at the time of purchase.

One of the things I had failed to realise was that this was a subscription driven purchase and even though the gift clearly was not for me, and that I had payed for a full 12 months rather than a monthly subscription, I was on the hook for a renewable subscription in 12 months time.

In my . opinion how this works is confusing as, even though the main account was transferred across to my wife, my bank account was subsequently debited 12 months on. I don’t dispute that the beauty box retailer at some level have references to how this works, but when the marketing is wrapped up as a 12 months Christmas gift, the nuance of being charged again in 12 months passes you by, but hey ho, my bad, I should have read the T&C’s, something I would advise everyone purchasing a renewable subscription to do.

Where things got interesting was when I was trying to figure out how the beauty box retailer had the authority to take money from my bank account because I was pretty sure I did not enter into a direct debit or standing order arrangement with them, and I never choose to save my card details. Indeed when I checked my bank account I could see that this indeed was the case, there were no references to a standing order or direct debit.

On contacting my bank I discovered that the retailer had deducted the money from my account by means of a ‘continuous payment authority’ or CPA as it seems to be known in the industry.

CPA’s function a little like direct debits but are different in the way they are processed. They enable companies to take money from an account whenever they think they are owed, and they are virtually transparent to the account owner. When I checked my online banking they did not show up at all and when I phoned the bank to ask where I could find them in my online banking managed payments section I was told I couldn’t as ‘they don’t appear there’. In fact they don’t seem to appear anywhere so you may have CPA’s linked to your account and you would never know about them.

CPA’s are mostly used by the retails industry but are starting to be used by more and more online merchants many of whom do not have customer service telephone lines and who may not respond to emails.

Prior to legislative changes in 2013 it was not possible to cancel a CPA with your bank or card authority, it had to be done by the Retailer but now any customer has the right to ask their bank or card authority to cancel a CPA.

There are calls for further legislative changes to ensure that consumers are being told and explicitly informed when they are consenting to a CPA rather than it being buried in T&C’s, something that is simply a ‘no brainer’ in my opinion.

In my case I was (eventually) able to get a response from the beauty box retailer who refunded my the payment and cancelled the CPA and future subscriptions, however in a world that is rapidly moving towards everything as a service/subscription and where even today it is estimated that 36% of people are paying subscription for services they do not need or are not aware of, it is clear that this is going to be a growing area for personal finance concern and where legislation needs tightening up.

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