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Press releases 2012 -

OFT issues principles to traders using Continuous Payment Authorities

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117/12    12 December 2012

The OFT has today issued a set of principles for businesses using continuous payment authorities (CPAs) amid concerns that customers are not always being made aware of what they are signing up to and may be misled about their rights to cancel.

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. CPAs are often used to collect renewal payments for things like vehicle breakdown services, insurance policies, gym memberships, online dating, mobile and broadband services or magazine subscriptions.

CPAs can provide an efficient and convenient payment method for customers. It is important, however, that where they are used customers are fully aware of the commitment they are entering into and can cancel them without difficulty should they choose.

The principles make clear to all businesses what they need to do to ensure that they fully meet their legal responsibilities when using CPAs, including that they:

  • are fully transparent about terms before a consumer signs up to a CPA arrangement
  • 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
  • provide adequate notice of any changes to the scope of the agreed authority, such as the amount or timing of payments
  • provide clear and prominent information on how to cancel a CPA.

The principles have been developed after a sweep of websites using CPAs checking for compliance with the Consumer Protection from Unfair Trading Regulations (CPRs) and other consumer protection laws. The sweep found signs that traders are not making it clear to customers that they are being signed up to a CPA, or about their rights to cancel.

CPAs are often confused with direct debits, but they do not offer the same guarantees. Customers can cancel a CPA with either the company taking the payment, or with the bank or card provider. Customers should tell the bank or card issuer that they have stopped permission for the payments. The bank or card provider has no right to insist that you agree this first with the company taking the payments, although it is good practice to also notify the company.

Following the sweep, the OFT will contact 24 businesses to help ensure their websites comply with the principles. The OFT will continue to monitor the way CPAs are used, with businesses breaching CPRs and other consumer laws risking enforcement action.

Jason Freeman, Legal Director in the OFT's Goods and Consumer Group, said:

'Continuous payment authorities, used properly, provide convenience for consumers and clarity about their commitments. However, businesses must make clear to customers what they're signing up for, when payments will be taken, and how they can cancel. Where they do not, businesses face the risk of enforcement action.'


  1. See the OFT's principles for businesses using continuous payment authorities.
  2. The OFT's web sweep, which was done in conjunction with other enforcers who are members of the International Consumer Protection and Enforcement Network (ICPEN), looked for potential breaches of the CPRs and other consumer protection laws in their use of CPAs as part of the OFT's ongoing work to ensure that consumers can shop confidently online.
  3. The OFT alerted consumers about subscription traps in July 2012.

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