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Moneybox Saturday, 6 July, 2002, 13:48 GMT 14:48 UK
Warning over credit trap
Be careful when you set up continuous payments
If you set up a regular payment on your credit card you have no automatic right to cancel, Money Box has learned.

In some cases, it can be practically impossible to end the agreement and disputes can take up to six months to resolve.

The problem is occurring because most people do not understand the difference between normal direct debit and the credit card equivalent, called "continuous payment authority".

Continuous payment authorities are becoming more common due to the internet.

By simply entering your card details, regular subscriptions to content providers can be set up immediately.

It is this form of payment that is commonly used on pornography sites.

But while setting up these payments is easy, stopping them can be a nightmare.

Debts

Moneybox listener Robert Webster signed up for a range of business services costing about 60 a month using his credit card.

Everything was fine until he tried to cancel. He called the retailer - that did not work, so he called the card company.

"They said they could not do it without the supplier instructing them that they would not be taking any more direct debits," he said.

Robert decided to cancel his card but his account with the card company carried on, so the debts kept piling up.

While direct debits are a relationship between customers and their banks, credit card regular payments are an agreement between customers and the retailer.

Companies who set up direct debits are vetted by the banks. But you may authorise any company with a Visa code, anywhere in the world, to set up a continuous payment from your credit card.

And it is not just consumers who do not know the difference.

Money Box's Martin Lewis spoke to a range of credit card companies, banks and industry bodies, few of whom recognised the cancellation process was different.

No warnings

To cancel a continuous payment authority, you must first contact the retailer.

If the retailer does not reply, cannot be contacted or refuses to stop collecting the payment, contact the card company, who will start a dispute process. Visa Europe Vice President Fiona Wilkinson explained the process.

"If it can be proven... that should be the end of it... it could take up to six months."

Unlike direct debit it involves proof. It is not simply a case of telling the bank to stop paying.

Yet even though the consumer could end up paying for six months of services they do not require, the credit card companies are not issuing warnings to customers.

A Credit Card Research Group spokesman Matthew Whiticker admits:

"We do need to clear the confusion. It is not in the card issuer's interest because the dispute is expensive for the company.

"But because it is such a small part of the market it has not been a number one priority."

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The BBC's Martin Lewis
"Beware - it can be pratically impossible to stop"
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