What are your rights when your money goes missing?
EVERY year, billions in household bills are taken directly from our current accounts by automatic payments. But when things go wrong, sorting out the problem can be difficult and baffling, particularly if you discover your regular payment is not what you thought it was. LAURA PULLMAN explains your rights.
HOW DIRECT DEBITS PROTECT YOUR CASH
DIReCT DeBITS are typically set up to pay regular bills, such as gas and electricity, a credit card repayment or the phone — 72 pc of regular household bills are paid this way.
It’s simply an arrangement where you give a company — or individual — permission to take money regularly from your bank account. The amounts can vary, as can their frequency, or they can be a fixed amount on a regular date.
WHEN YOU’RE TO BLAME FOR A MISTAKE
STaNDING orders are the next most common type of billing method. The main difference between a standing order and a direct debit is that when you set up the former, you are giving your bank an instruction to pay another account a regular amount on a set date.
effectively, you’re pushing the money across to the other account, instead of a company pulling the money from yours, as with a direct debit.
This means you are the only person who can change the date or the size of the payment to be taken from your account.
Standing orders are typically used to pay rent, magazine subscriptions, monthly charity donations or if you want to make a regular payment into a savings account.
They can be cancelled before the close of business on the working day before payment is due to be made.
however, unlike direct debits, there is no protection if things go wrong. Fail to cancel a payment in time and you will have to fight the company who received it for your money back.
THOUSANDS DUPED BY BILLING TRICKS
The most controversial and confusing type of regular bill is called a recurring parment. Many people have been duped into giving companies permission to take these payments from a credit or debit card without them knowing.
Confusingly, these recurring payments appear to be a bit like direct debits, but, in fact, they are nothing of the sort. They are often used by payday lenders, gyms, credit check services, identity theft insurers and companies that depend on annual subscriptions.
The reason many companies favour this payment method is that it allows them to dip into the customer’s account and take money whenever they like. This also catches out customers who have subscriptions they believed had expired but are suddenly docked from their account. Companies need to set up a recurring payment — also known as a continuous payment — and their authority is your 16-digit card number. You should be told you are signing up to this agreement, but frequently it is not clear. Companies can change the dates and amounts of payment without notifying the customer. and until recently you could not cancel a recurring payment with your bank. You had to do it through the company who had the agreement with you, which in some cases can prove nigh on impossible. This has changed. In January, the Financial Services authority confirmed that if you tell your bank to cancel the payments, they must do so.
however, recurring payments are still not covered by any industry safeguard. as they are often set up over the phone or the internet, there may be no paper record of the agreement.
If you are unsure, ask the company for clarification of their payment method in writing.