THE TRADING watchdog has announced new rules for firms who sign customers up to recurring payments for services such as insurance and gym membership, amid concerns that customers may be misled about their rights.
The new set of principles are for continuous payment authorities (CPAs), which are also used to collect renewal payments for services such as mobile and broadband, magazine subscriptions, dating websites and payday lending.
The Office of Fair Trading (OFT) recently carried out a sweep of 24 un-named businesses to make sure they are meeting consumer protection laws and said it will write to all of them to ensure they comply with the principles.
The sweep uncovered signs that traders are not making it clear to customers that they are being signed up to a CPA, or that they have cancellation rights, the OFT said.
A CPA is a type of automatic payment set up using a debit or credit card and works in a similar way to a direct debit, with consumers giving a firm permission to take a series of payments on their card.
However, CPAs do not have the same guarantees that direct debits have regarding the date of a payment or the amount, meaning that customers should keep a close eye on their bank statements to make sure that payments are in line with what they were expecting.