Complaints rise over subscription payment cancellation problems

Consumers are finding it hard to cancel recurring direct debit payments that come out of their credit or debit card accounts.

People using their debit or credit cards to pay for recurring online subscriptions are finding it hard to cancel them, prompting a rise in complaints to the Banking Ombudsman.

Ombudsman Nicola Sladden said she had received numerous complaints from people frustrated at their bank’s inability to stop recurring payments for the likes of streaming services, anti-virus programs and free trials.

Sladden said many people assumed recurring direct debit payments could be canceled by their bank but that was not the case.

“They are actually authorized through the card provider – usually Visa or Mastercard – and are notoriously difficult to cancel without the co-operation of the company receiving the payments.”

Sladden said many people also believed that canceling their card or closing the credit card account would stop future payments.

“But this isn’t necessarily so because the authority remains valid until canceled with the company. In addition, card providers’ rules allow a company to charge the customer even though the customer has canceled the card or closed the account.”

She said the only way to cancel the payments was with the company directly.

However, if the company ignored the request the bank could recover the funds through a chargeback.

Chargebacks allow card providers to reverse payments if a company has taken the money out after the customer cancels the service.

Sladden urged consumers to keep a record of their cancellation request to provide as evidence to the bank.

The Ombudsman said consumers should be also wary of any business that asked them to sign a blank direct debit form or more than one form as this allowed the business to submit a new direct debit request to the bank after the existing one had been canceled.