I can't cancel a recurring payment - what do I do?
"I SIGNED up for a service charging a monthly fee to manage my Twitter feed. Now I want to cancel but they're not returning my emails, and the bank says they can't stop the company taking money because it's a recurring payment. What can I do now?"
This is a common problem and one that is still perpetuated by people and organisations who really should know better.
Let's be clear: card providers and banks can cancel recurring payments; in fact they must when a customer withdraws consent for the cash to be taken.
Staff who say they can't do it are either being wilfully obtuse or are woefully misinformed.
How to stop recurring payments
1. Check what you agreed to
When an individual signs up for a recurring payment, also known as a continuous payment authority or recurring transaction, they're authorising a company to take money from their bank account.
It really is that simple: once the company has that authorisation they can take payments whenever they please - and for unspecified amounts.
The typical recurring payment relies on the company asking for the most prominent number on your card, the long one across the middle. They'll ask for the card's expiry date and security code, but they won't necessarily specify a date for payments to be taken.
Anyone who signs up to make payments in some other way - by providing sort code and account number, or sending a form to your bank, for example - probably has a different form of regular payment on their hands: more on how to tell here.
Assuming you did sign up for a recurring payment, the next step is to...
2. Contact the retailer
As we said above, banks and card providers are allowed to cancel recurring payments - and they must when the cardholder withdraws consent for the payment to be taken, or didn't give it in the first place.
Let's just repeat that for emphasis: the card provider must cancel or decline further payments when you withdraw consent for them.
The Financial Conduct Authority is pretty clear about this. They say:
"...you do have the right to cancel directly with your card issuer. Once you have done this, it must stop payments immediately - it cannot insist that you agree this with the company taking the payment first."
"If you have ever had one of these payments set up and then struggled to cancel it, you should be aware that you have the right to cancel through your card issuer and to complain if it does not do so."
But still, try to cancel the payment through the company first. There are two good reasons for doing so.
Firstly, you might be able to resolve the issue fairly easily just by getting in touch, or by being politely persistent, which is always preferable.
Secondly, showing that you've made every effort to cancel with the company is highly likely to speed up the cancellation process with the bank.
This is very similar to the pattern we see again and again with section 75 refunds (more on those here).
In law, section 75 makes the credit card provider equally liable with the retailer under certain circumstances. In practice, few card providers will even entertain a claim until the cardholder has reached deadlock with the retailer.
Contacting the retailer, and retaining records of that contact - especially the date you requested that the payment stop - is the pragmatic choice.
3. Go to the card provider - be firm
To cancel a payment, contact the card provider or bank via email, phone, letter, or in person.
Name the company receiving the payment and any other information - such as how the payments appear on statements.
Tell the card provider or bank that the payments should be stopped immediately.
If there are any quibbles, cite regulation 55 of the Payment Services Regulations 2009. There's more on this law and its specific clauses below.
4. Last resort
If neither the company nor the card issuer plays ball and you're unable to resolve the issue after eight weeks, you can take the case to the Financial Ombudsman service.
They are a free, fair resolution service and will be able to give you a final answer. Their site is here.
Recurring payments FAQ
Why do companies use recurring payments?
As we said above, recurring payments are simple.
Companies don't have to fiddle about with standing orders or direct debit mandates and customers don't have to remember to pay.
Although we're focusing on the negative here, lots of legitimate companies use them.
However, the other reason that recurring payments became so popular with companies hawking everything from gym memberships to insurance cover is that they have a reputation for being relatively difficult to stop.
Until the law changed in 2009, the company taking the payment had the final say on whether the payments would carry on.
If they refused to stop a payment, banks and card providers would merrily allow them to continue withdrawing customers' money.
Despite the change in the law, in 2012 the consumer group Consumer Focus found that 44% of bank and card provider customer service advisers didn't know whether it was possible to cancel a recurring payment through them.
A year later, the FCA ran a mini campaign publicising the right to cancel - adding that banks and card issuers who allowed payments after receiving a cancellation request would be liable for their refund.
Yet, in reality - as we've seen, these payments can still seem difficult to cancel, and open to abuses large and small.
A 2014 report [pdf] from the Financial Ombudsman Service (FOS) found that 19% of complaints made about payday loans involved recurring payments.
Since July 2014 payday lenders haven't been allowed to use continuous payment authorities to attempt to take money from borrowers' accounts more than twice, or take part payments.
This coincided with the introduction of the Consumer Contract Regulations [pdf].
Under Regulation 40 of this law, the default option for retailers is supposed to be "no additional payments".
This is meant to prevent companies automatically renewing recurring payments unless the customer actively tells them not to - for example automatically taking payment for services like insurance or breakdown cover when people no longer need or want them.
Should I avoid recurring payments?
People should avoid setting up recurring payments wherever they can, instead asking to make payments via direct debit or standing order.
If a recurring payment is the only option, check all the small print.
As mentioned above, the default option should be for no additional payments - so make sure there are no pre-ticked boxes committing you to future spending.
How can I tell it's a recurring payment?
Your bank will be able to tell you what type of payment has been taken. It's usually listed on your statement or list of transactions next to the debit too.
As we said at the beginning, the dead giveaway that you've signed up for a continuous payment authority is that the company asked for the number on your card.
If they didn't, you may have signed up for regular payments via direct debit or standing order.
With a direct debit you will have been asked for your account number and bank sort code (the small numbers usually found along the bottom of your card) and to sign or tick a box authorising the direct debit mandate.
You probably also agreed a date for the regular payment to come out of your account.
If it is a direct debit you've got, they're fairly easy to cancel as they're covered by the bank guarantee scheme.
The agreement is with the bank rather than with the company, so the bank knows it must cancel the payment when a customer makes that request.
Get in touch with your bank and give them as much information as possible about the payment: this will include your customer information as well details of the amount and date of the payment.
A standing order is the easiest of all to cancel.
In this case, it's you that asked the bank for the payment to be set up, and provided the recipient's bank details.
The example most of us will be most familiar with is paying the rent: your landlord or agent will provide their details and ask you to set up the payment.
You have the right to cancel at any time by request.
Could it be fraud?
If money is leaving your account, but the company named on the transaction denies taking payment or won't get back to you, it could well be fraud.
See our full guide to card fraud, here, for help.
What if I entered into a contract?
So far we've been describing a situation like this: you ask for a subscription to be cancelled, the company refuses or says nothing at all.
But what if they say, "no, you entered into a contract"?
If the company in question has been obtuse - that is, they didn't make it clear you were signing up for a contract - the UK Cards Association says:
"...you will be able to get money refunded by your credit card company (be prepared to provide details) as it is not an authorised transaction unless the nature of the commitment was made clear to you."
If you can reasonably show you didn't know it was a contract, it isn't binding.
If you knowingly signed up to a contract but want out, you can still get your bank to cancel the recurring payment - that is, after all, your right.
But you may still owe the company money, and they are entitled to pursue you for it.
What do recurring payments have to do with payday loans?
Since the introduction of the Consumer Contract Regulations, and a crackdown on payday lenders in general, some of the problems with the industry and the continuous payments authority system have eased up.
As we mentioned above, they're no longer allowed to make repeated attempts to take money from borrowers, or take part-payment unless previously, explicitly, agreed with the borrower beforehand.
But there are still issues. For example, they're allowed to try to take money twice - and if those attempts are declined, both could result in the bank charging the account holder.
They're also supposed to give borrowers notice, usually of three days, before attempting to take a payment - but many of the complaints made to the FOS showed that notice wasn't always given before a repeat attempt.
What do the Payment Services Regulations 2009 say?
If the Consumer Contract Regulations don't apply - that is, the recurring payment was authorised before July 2014, or there's not an issue about unknown additional payments - your fallback is the Payment Services Regulations, which came into force in November 2009.
Wow your friends and family (and your bank) by citing the specific parts that prove your right to cancel under law.
The law makes it very clear that card providers and banks have to stop recurring payments if requested to do so by their customers.
They also make it clear that the consumer can do this without having to inform the company who was taking the payments.
That's Payment Services Regulations 2009, regulation 55 parts 3 and 4.
The law also specifies that card providers and banks that fail to obey their customers' instructions must refund any payments that occur after the request.
Any fees that may have been incurred must also be refunded.
That's Payment Services Regulations 2009, regulation 61.
Those are the main parts you can use. The actual legislation is available here but, be warned, is extremely difficult to decipher for anyone not fluent in legalese.
What about agreements made before 2009?
It might be the case that you gave a company your details before late 2009 - does that mean the law doesn't apply?
Not a bit of it. The important part is that you asked the company to cancel the recurring payment on or after 1 November 2009.
If the company did not comply, your bank must stop the payments.