Hard-up consumers are being exploited by payday lenders who drain bank accounts using continuous payment authorities
Money is often taken without permission or warning and sometimes even after loans have been paid off, says charity
Personal Finance Editor
Wednesday 11 September 2013
Hard-up consumers are being exploited by payday lenders who drain their bank accounts using continuous payment authorities (CPAs).
Money is often taken without permission or warning and sometimes even after loans have been paid off, according to evidence gathered by Citizens Advice.
The charity reckons nine out of 10 payday loan customers who complain about CPAs could have grounds for a complaint about unfair treatment.
Citizens Advice chief Gillian Guy said: “People can feel powerless when unscrupulous payday lenders use CPAs to run amok in their bank accounts. Now, we’re reminding consumers that they can fight back.
“If you’ve been badly treated, and the lender hasn’t put right their mistake, then you can complain to the Financial Services Ombudsman.”
The problem stems from the fact that CPAs give lenders the power to snatch money from people's bank accounts. Many lenders make use them if borrowers are late with payments. But such actions are unscrupulous and leave vulnerable people unable to pay for food, rent or other basic necessities.
Citizens Advice has details of many such victims, who have turned to the charity in desperation. A West Midlands man with mental health problems had his wages taken on the day he was paid leaving him with no money for essentials.
Meanwhile payday lenders took so much out of the account of a young woman in Wales that she was unable to cover her living expenses and was eventually forced to move out of her home.
Consumers have the right to cancel CPAs before payment is taken, but many who try are passed between banks and lenders who both claim that they can do nothing to stop the money from coming out.
Last November the OFT accused payday lenders of misusing continuous payment authorities and told firms “we will not accept its misuse”.
But in July – after evidence emerged of gyms misusing CPAs to take money out of former members’ accounts - the City Watchdog ruled that banks and mutuals must cancel a payment themselves and not require their customer to contact the merchant or lender to cancel.
As the problems continue Citizens Advice yesterday demanded that banks respect people’s right to cancel CPAs.
International Women's Day 2014: The shocking statistics that show why it is still so important
Feminist quotes to inspire you on the International Women's Day
Oscar Pistorius trial: Case turns into a bizarre safari following the tracks of a wounded lion
Belle Knox: How the porn star student from Duke University became bigger than Justin Bieber
Liam Neeson on death of wife Natasha Richardson: ‘When I hear the door opening, I still think I’m going to hear her’
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 Academy members voted for Oscar-winning 12 Years A Slave 'without watching it'
- 3 Orgasm machine to deliver climax at the push of a button
- 4 Liam Neeson turned down James Bond role to marry Natasha Richardson
- 5 Livr: A social network only for drunk people
£12000 per annum: Inspiring Interns: A small but growing chain of boutique hot...
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£45 - 60k Per Annum: Charter Selection: Highly profitable leisure brand, marke...
£30000 - £50000 per annum + Highly Competitive Salary: Austen Lloyd: Residenti...