Friday, 22 February 2013

Payment Methods and What You Should Know - CCA's

This post is the third in my Payment Methods and What You Should Know series.
 

What is a CCA?

CCA stands for continuous card authority, and this is a payment method that not many people are aware of, even when they have one set up!

Personally, I think they are extremely dubious, because they are not protected in the same way DD's are and companies using them are often not that clear that you are on a CCA rather than a DD. Also, they are frequently set up verbally with no paperwork to sign, and the main reason they are different is that the mandate is held on the third party's records, not the banks.

This last point results in two things.

Firstly, when checking your account, a Direct Debit mandate will show up, because the bank itself, has the original copy of it. The bank staff can see it, and it will be listed under your regular payments on your internet banking account. The bank can also cancel this agreement at any time without problem and the company cannot then take money from your account. A continuous card authority does not show up in this manner though.

With a CCA, the bank is often unaware it exists until it gets called upon, (often this applies to the customer too) and even then, it looks like a normal card transaction. It's then that confusion sets in as banking staff frequently don't know that the rules covering this less common payment method changed a few years ago, in the customer's favour.

What used to happen, is you would have to write to a company in order to withdraw the mandate you had given them. Some companies are fine taking a cancellation over the phone, but there are other times when the communication gets lost, (we've all experienced poor service from call centres). Then the payment gets taken anyway. The customer then rings their bank to complain and reclaim the money. The bank tells them they can do nothing and refers them to the company involved, who may not always be that helpful about returning the money.
An example of this is insurance companies. Under the latest UK Road Traffic Act, in certain circumstances, insurers can still be held liable if your insurance runs out, you don't renew it elsewhere, and then have a prang. Understandably, this is why they like to auto renew a policy at expiry.

Of course, 12 months later, most people have forgotten about the auto renew feature they were told about, and when their insurance renewal reminder drops through the door, they give it a quick cursory glance and don't read it properly, unaware of the impending payment. If they then get a policy elsewhere, naturally they are a little upset when the original company debits their card unexpectedly and then refuses to refund the money until proof of insurance elsewhere has been received. To rub salt into the wound, an administration fee is often charged for early cancellation too!
Legally, things are different now. The Financial Services Authority now says you have the RIGHT cancel payments by telling your bank or credit card that you have withdrawn your permission for the mandate, although with bank and credit card staff still being widely unaware of this, the reality is still the same as it ever was, so good luck to you.

All in all, it's best to avoid continuous card authorities completely if you can. If this is not possible, make a note of it (set a reminder on your PC, or your mobile phone), and as soon as the last payment you want to go through, has gone through - write to the company involved withdrawing your permission. Remember! Always keep a dated copy of the letter, as you can show it to you bank as proof a company does not have an authority anymore. This then makes it easier for you to get the bank to reverse a payment if one is taken at a later date on the basis that it was not authorised. This way you don't have to argue the toss with the company holding your money, and they can't hold you to ransom over any "administration" fees.

No comments:

Post a Comment

I'm chatty. Leave me a comment.