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Regulator introduces CPA principles

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The Office of Fair Trading (OFT) has issued a new set of principles around the use of continuous payment authorities (CPAs) after it found evidence that customers are not always aware of what they are signing up to. It has developed the principles following a sweep of websites using CPAs revealed that traders are not making it clear to consumers that they are being signed up to a CPA, or about their rights to cancel. CPAs have come under scrutiny recently after the OFT raised concerns in its interim report published in November, as part of its review into payday lenders, into the use of CPAs by the high cost credit industry

 

Once a customer agrees a CPA, it allows a business to take a series of payments using the customer’s debit or credit card without having to seek authorisation for every payment. CPAs are often used to collect renewal payments but do not offer the same guarantees as direct debits, as customers are able to cancel a CPA with either the company taking the payment or with the card provider. 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.

 

The principles stipulate that businesses are “fully transparent” about terms before a consumer signs up to a CPA arrangement and provide “adequate” notice of any changes to the scope of the agreed authority, such as the amount or timing of payments.

 

The OFT stated that companies should ensure the consumer has given informed consent to the use of a CPA, and that businesses do not use “opt out” provisions or other means to automatically assume the consumer has given consent. The onus will also be on businesses to provide information on how to cancel a CPA. Following the sweep, the OFT has said that it will contact 24 companies to ensure their websites comply with the principles.

 

Link: http://www.credittoday.co.uk/article/14670/online-news/regulator-introduces-cpa-principles

 

 

http://www.oft.gov.uk/news-and-updates/press/2012/117-12

Edited by ukaviator

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