People who unknowingly end up subscribing for services after signing up for free trials are to be offered more protection.
Plans to cut confounding small print and end the cycle of ‘subscription traps’ will be set out in next week’s Budget.
Chancellor Philip Hammond will outline a crackdown on practises which lead to people wasting their money.
Firms will be forced to make terms and conditions shorter and clearer, with penalties for those who mistreat customers.
The move follows concerns that many people are falling into a ‘subscription trap’, by signing up for a paid-for service without meaning to – for example, when a paid subscription starts automatically after a free trial has ended.
Citizens Advice estimates that two million consumers each year have problems cancelling subscriptions.
People taking up offers for free trials of anything from slimming pills and beauty treatments to video streaming and e-book subscriptions, can find regular payments are taken from their credit or debit card without their apparent authorisation.
A Citizens Advice survey found four out of five people who had a problem with unwanted recurring pays didn’t realise they had signed up to the payments until fund was taken from their accounts.
These so-called “continuous payment subscriptions” are automatic payments which work in a similar way to a direct debit, with customers devoting a supplier or retailer granted permission to take pays on their card.
Under the proposed changes, companies such as Amazon and Netflix could be forced to stop taking people’s card details when they sign up to a free trial.
‘I merely panicked’
Julian Simms from Castleford, West Yorkshire, told BBC’s Watchdog what happened when he saw an advert pop up on his phone for a ‘free trial’ for some face cream.
He paid 3.95 for postage and packaging and it arrived the next day.
But two weeks later he noticed that his bank balance was significantly lower than it should have been. Two pays, one of 59 and another of 69, had been debited from his account.
Mr Simms told: “When I considered the amounts of fund that had been taken from my account I only panicked. I was scared that hundreds of pounds was going to get taken out.”
Once he tracked the company down, he managed to get one payment refunded and the other stopped, after speaking to his bank.
James Daley, from the consumer research group Fairer Finance, said many people objective up paying hundreds of pounds for services they didn’t need.
“We’ve all signed up to something because it’s offered free today but it’s going to end up, very quickly converting into a monthly subscription that’s a lot more expensive, ” he said.
What is an ongoing pay authority?
A CPA, also known as a ‘recurring payment’, is a regular pay links between your credit or debit card – it is not a direct debit The company can take pay on whatever day they want for whatever sum they prefer They can be put up in person, online or over the phone and often there is no written record of them They are often used for magazine subscriptions and gym memberships Consumers have the legal right to cancel a CPA through the company concerned or your bank