Sunday, 5 March 2017

The Subscription Trap Costing Brits Millions Under Attack - But What Is Changing

Subscription Trap

The government has announced a crackdown on 'misleading' consumer practices including subscription traps, where people pay for membership plans they aren't aware they've agreed to - and subsequently end up out of pocket.

Ahead of the spring Budget next week, the Chancellor has vowed to help people make better-informed choices about how they spend their hard earned cash - by strengthening their powers.

The Consumer Green Paper paper, to be set out by the business minister Greg Clark, will "closely examine markets which are not working fairly for consumers and reveal how the government intends to help".

A report from Citizens Advice last year found as many as 2million people struggled to cancel continuous payments - often used for buying products online - and 4 in 5 people had issues cancelling after being signed up without their knowledge.

Citizens Advice chief executive Gillian Guy said: "Subscription traps are taking hundreds of pounds from people’s bank accounts without their permission.

"From beauty treatments to gym contracts - consumers are signing up to free trials or one-off discounts only to find that money is then taken from their account each month."

More than 16.8 million UK consumers signed up to a subscription service using a continuous payment authority (CPA) between June 2014 and June 2015.

Subscription traps are used for a wide variety of goods and services but most of the problems are encountered with health and beauty related products. They are usually advertised online.

Terms and conditions are frequently not clearly and prominently displayed and key information is often hidden.

A huge 84% of consumers who answered our online survey did not realise they had agreed to a subscription. What are 'subscription traps'?

<>pThese are situations where a consumer is tricked into agreeing to a subscription through the advertising of a 'free trial' or reduced price offer.

If the consumer doesn’t cancel the trial within a set amount of time they automatically get transferred onto a costly subscription payment plan.

Unscrupulous companies who use subscription traps can also abuse the payment method used, continuous payment authorities (CPAs), to take as much money as they want from consumers’ accounts whenever they like without prior notice.

Giving the power back to the consumer - What's changing?

Citizens Advice said it recently helped one person who lost £150 after applying for a free trial of slimming pills - and being auto-enrolled into a payment plan against their knowledge.

Citizens Advice's Guy said: "The government’s plan to make sure people are told if a payment is due to be taken will give consumers the opportunity to put a stop to it - so they can make sure their money stays in their bank account.

"Subscription traps are one of the many nasty surprises that can be hidden in the small print.

"Firms are bamboozling consumers with lengthy terms and conditions and complicated clauses making it really difficult for people to know what they’re signing up to.

Subscription Trap

"A welcome clamp down in this area will help people know where they stand and challenge unfair practices," he added.

The Consumer Green Paper identifies plans to put a stop to people paying automatic fees, along with ensuring those that are signed up are notified when a payment is about to be taken.

The government has also vowed to crack down on complicated small print - which often makes little sense to the consumer.

Terms and Conditions (T&Cs) can often be tens of thousands of words long, containing acronyms as well as complex legal and financial jargon that put consumers off reading them and not fully understanding what they are signing up to.

The government says it will examine a range of options to make it clearer for consumers, including making the key terms much more obvious, the standard usage of tick boxes, rankings on good practice, as well as improving understanding of which terms cause most confusion.

In its final pledge, it says there are plans to introduce new powers to impose fines on companies that mistreat customers.

The government will allow consumer enforcement bodies such as the Competition and Markets Authority (CMA) to ask civil courts to order fines against companies, including those in unregulated markets, which breach consumer law.



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