Online subscriptions and club memberships: why ticking a box could cost you a fortune
Be on your guard when shopping online - you may unwittingly sign up for a suscription or club membership which will cost you a fortune.
Online shoppers have reported an increasing number of subscriptions and club memberships set up without their knowledge.
The subscriptions, which incur a monthly fee, are usually set up after the customer ticks a box offering them money off their next purchase or a discount on goods bought from a third party.
lovemoney.com has been contacted by several readers who have fallen victim to this kind of scam and then found it difficult or impossible to cancel the recurring payment set up.
Last month jaypar6 posted in the Lovemoney.com Q&A section that after buying a toothbrush for £1 he’d inadvertently signed up for a “VIP” subscription with pointshop.co.uk and £45 was taken from his credit card.
When he queried the charge with his credit card company he found pointshop.co.uk was based in Denmark and the company was insistent he’d said yes to the subscription.
I checked out pointshop.co.uk – written in appallingly broken English – and couldn’t see anything that suggested customers were agreeing to a £45 subscription by joining.
Elsewhere on the web other users complained they’d been conned by pointshop.co.uk in the same way.
All About Prizes
Another reader fell victim to another Danish company called All About Prizes. Thinking he was signing up to receive a free £10 Amazon gift voucher and that the company was connected to Amazon, he handed over his card details to take advantage of a 14-day free trial whereby the site entered competitions on his behalf.
However, he then discovered he’d been signed up to a £29 per month payment for membership. Surfing the net he found others who’d signed up to a free trial but then been billed and found it impossible to get the membership or payments cancelled.
Elsewhere, others have fallen victim to similar schemes like Rewards First.
Rewards First is free for the first 30 days, then costs £14.95 a month.
Membership is offered to a “discount club” when shopping online. However, after a free trial money is taken from members’ accounts and cancelling payments is notoriously difficult.
The main problem with these subscription services is that payment is taken via continuous or recurring payment authority on either a debit or credit card.
With a continuous payment authority, you give the company your card details and authorise it to take regular payments from your account.
Recurring payments are different from direct debits or standing orders in that the company receiving the payment is responsible for cancelling it rather than the card holder. In many cases customers ask for their subscriptions to be cancelled and this isn’t actioned by the company concerned.
Consumers, and also it seems banks and other organisations, are confused about how to cancel continuous payments.
The Financial Services Authority (FSA) recently issued some updated guidance to set the record straight. It says: "In most cases, regular payments can be cancelled by telling the company taking the payments. However, you have the right to cancel them directly with your bank or card issuer by telling it that you have stopped permission for the payments. Your bank or card issuer must then stop them – it has no right to insist that you agree this first with the company taking the payments."
So, if the above situation happens to you and your bank refuses to stop the payments, stand your ground and insist that it does so.
The UK Cards Association says businesses should be clear in their dealings with customers when it comes to repeat transactions. If they’re not, you should be able to get the money refunded by your credit card company or bank as it is not an authorised transaction.
What should you do?
If you’ve inadvertently signed up to a subscription you didn’t agree to or joined a club you didn’t intend to because the terms were not clear, contact the organisation concerned and ask for it to stop taking payments.
If you don’t hear back from them, or the payments continue, contact your bank or credit card company and insist the payments stop. If it doesn’t help, point it to the FSA’s guidance.
The best advice though is be careful what you’re signing up for. If you sign up for a free trial of something check your cancellation rights when the trial is over. Wherever possible avoid committing to a continuous or recurring payment, and stick to direct debits and standing orders instead.