Think you’re getting a ‘free trial’? Fat chance!

Daniel VandenBurg, Consumer Intelligence Analyst

As part of Scams Awareness Month Daniel VandenBurg and Nick MacAndrews from the Citizens Advice Consumer Intelligence Team look at one of the most common scams: subscription traps.

In our report Alarm bells briefing: slimming pill ‘free trial’ scams published in December 2014 Citizens Advice predicted that consumers in the UK would have lost £1 million to subscriptions traps for slimming pills during the financial year 2014-15. This year we have seen a continuation of the problem which is also branching out into other types of products and services.

How do these subscription traps work?

Our report found that people were tempted into free trials for slimming pills or similar health supplements, often by online pop-up adverts or across social media sites featuring celebrity endorsements. People thought they were simply giving their debit or credit card details to pay for the £5 postage and packing. But, if they’d read the extremely long small print, they would have discovered that they had signed up to a monthly subscription for these products unless they cancelled within a set period of time.

These terms sometimes came with a pre-ticked acceptance box or an implicit acceptance ‘in placing the order the consumer accepts the T&Cs’. By agreeing to these terms people had effectively formed a contract with the seller and had unknowingly agreed to a continuous payment authority (CPA).

What is a continuous payment authority?

In a recent survey* we found that only 21 per cent of adults in Britain knew the difference between a CPA and a direct debit. A CPA is implemented by giving the trader the long number on the front of your debit or credit card and the last three digits at the back rather than your bank account number and sort code. When you consent to a CPA you are giving the retailer permission to take future payments from your credit or debit card.

These payments can, in theory, be for any amount of money and taken on a day of the trader’s choosing. Whilst the flexibility of this payment method is useful for a variety of subscription services such as gym memberships or online streaming services, unscrupulous retailers can abuse them by taking large sums of money from people without their informed consent. This was frequently the case for our clients who contacted us in relation to slimming pill free trials.

How much of a problem is this?

It is difficult to put an exact number on how many people fall foul of subscription traps; however, between 1 April and 29 June this year 2,024 people rang the Citizens Advice Consumer Service helpline seeking advice in relation to products commonly associated with subscription scams, like slimming pills, face creams, and hair replacement therapies. 1,518 of these people paid using their debit or credit card making it highly likely they had trouble with a CPA. And this is just the tip of the iceberg, as we are now starting to hear about problems with other products like discount vouchers, collectible toys and fresh food delivery.

We also found from our recent survey that 48 per cent of adults in Britain had, at some point, signed up to a subscription service using a CPA. Of those, 38 per cent had tried to cancel their subscription and of these 8 per cent had their request denied by either the retailer or their bank. When this is scaled up and compared to the total adult population of Britain (around 49 million) it is possible that in the region of 1.9 million people** have had problems cancelling a CPA for a subscription service.

What can you do to about it?

Always read the terms and conditions of any agreement and be wary of any ‘free’ trials that ask for your debit or credit card details. If you do find yourself unwittingly signed up to a CPA the law says you can withdraw your consent and stop a future payment at any time up to the end of business on the day before the payment is due. You can do this by contacting your card issuer. Don’t be put off if they tell you to contact the retailer. It is your right to cancel with your card issuer, and in the case of subscription traps the companies involved are often based abroad and are hard to contact.

sam15-subtraps-500x
Click on image to download full infographic

What are we doing about it?

As well as raising awareness of the problems with subscription traps and CPAs through Scams Awareness Month 2015, we are also conducting a research project with Citizens Advice Scotland to better understand the problems people face. We are running an online survey of people who have been affected by this issue as well as conducting face-to-face interviews over the summer. We intend to use the findings from this project to give enforcers and regulators the evidence they need to take action in this area.

If you would like to get involved, please complete our online survey.

*All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,023 adults. Fieldwork was undertaken between 12th – 15th June 2015. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

**Calculation by Citizens Advice, using mid 2013 ONS population estimates. 4% of 49,103,873 = 1,964,155

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20 comments

  1. william love

    When I pay online I use a prepayment card, charged with only the amount I want to spend,

    That way if anyone tries to take more of my money, It is NOT there.

    Result they are stuck.

    1. Daniel VandenBurg

      many thanks for sharing your tactics to protect yourself when shopping online

  2. John Bradshaw

    Gavin John Macdonald Company director of —

    SKIN SYSTEMS LTD
    SKIN ADVANCE LTD
    RADIENT SKIN LTD
    GS LABS LTD

    Uses these tactics to offer free trials of products to women and the take money from accounts
    The address used for registered offices are mail box style agencies, as are money collection and cancellation agencies
    Nowhere is his own address shown.He prefers to remain anonymous whilst preying on vulnerable people.

  3. Mary

    I was tempted into a ‘free trial’ of the raspberry ketone slimming pills. They came very quickly but I found after a few days that they didn’t agree with me. I emailed the company to cancel the trial and I emailed to the bank to cancel the direct debit to find that it wasn’t one, but this CPA. I had never heard of it! The only way that I could stop a payment of £79 was to cancel my card, which I did. Was only minus a card for a few days, but was glad. The company contacted me to say that payment had been refused and I told them that I had cancelled the membership and they gave me an address to send the rest of the tablets back, at my cost! I didn’t!

    1. Daniel VandenBurg

      Hello Mary

      many thanks for sharing your experiences with us and sorry you have been affected by this issue.

      An omnibus survey we did with YouGov found that most people in the UK hadn’t heard of CPAs so you are in the majority there!

      We would be interested in hearing more about your experiences, would you be willing to do an interview with us? If you would be willing then please contact us on partnershipintelligenceteam@citizensadvice.org.uk

  4. Margaret

    These offers can be made available as advertisements on the sites of British newspapers and one somehow assumes that they must be genuine for that reason. My personal view is that newspapers should exercise more caution and critical judgment in accepting adverts from companies making free offers ( and wildly exaggerated claims about the celebrities using their products) , particularly when these companies are based abroad.

    1. Daniel VandenBurg

      Hello Margaret

      many thanks for your comments.

      Positioning adverts in trusted locations seems to be a common tactic in this area. We have seen cases where hosted adverts or pop ups appear in places such as Facebook and supermarket or newspaper websites. It is therefore very interesting to us that you have found adverts in newspapers. Asking advertising space sellers to be more cautious in their dealings would be preferable for us and we hope to gather evidence to aid this during our research

  5. Laura

    Fabletics.co.uk do this and I feel so ripped off. I ordered a gym outfit months ago and had unwittingly signed up to a membership programme. They have been taking £44 a month from my account and i have been getting nothing in return!
    I called to complain and they said it was there in the small print. I had no idea they could keep taking money from me and sending me nothing! It’s literally daylight robbery.

    1. Daniel VandenBurg

      Hello Laura

      thanks for your comments, sorry it has taken us a little while to get back to you.

      Sorry you have been losing money to Fabletics. Have you looked into how to cancel the contract? What does the £44 / month supposedly get you?

      Have you tried taking any action yet? Our advice page on stopping future card payments might be useful to you:

      https://www.citizensadvice.org.uk/debt-and-money/banking/stopping-a-future-payment-on-your-debit-or-credit-card/

      We would be interested in hearing from you further if you would be willing to do an interview with us? If you would be willing then please contact us on partnershipintelligenceteam@citizensadvice.org.uk

  6. Ian Barlow

    Slightly off topic in that it is not a “free” subscription trial.

    One use of CPAs I have come across is by Glide. This is an company aimed at people living in shared accommodation – typically students and young professionals who have not long left their parental home. They provide gas, electricity, water and telecoms services. They insist on payment by CPA. They say this is to protect the customer from bank charges! “Can I pay by direct debit? We currently only offer payment by direct debit for our business customers. For tenants, we only offer payment via Continuous Payment Authority on your debit or credit card. Our customers benefit from fewer (or often no) bank fees should their payment fail whereas there are always fees for failed direct debits. We don’t want our customers to incur unnecessary bank charges.”

    Having experienced, through my daughter, a lengthy dispute with them over an overestimated bill the use of CPA is particularly concerning as this provides no protection for the consumer and Glide are free to take the money they think appropriate (fortunately my daughter had refused to sign up).

    1. Daniel VandenBurg

      Hello Ian

      thanks for your comments, sorry it has taken us a little while to get back to you.

      Thanks for sharing your experience. The sector of utilities is not one which is traditionally linked to CPA payments. This could show how this payment method is growing in popularity in the UK.

      CPAs can be useful when paying for things where the amount you need to pay each month can vary from month to month. But their flexibility also makes them abusable by more unscrupulous traders such as those who run subscription traps.

      How CPAs and subscription traps impact people in the UK is something we are hoping to uncover this summer in our work.

  7. Jane Forbes

    Hi, yes I was daft enough to fall for one such scam, free trial of beauty product, the first I knew of it, my bank rang me to say £90 had been removed from my account twice, I could not believe, I rang the company straight away and was told…….you have gone past the 14 day tial and not returned them, this was the first time I realised I had missed the fine print. They agreed that as I have not opened one of the products, I could return it and they would refund £45, which I said yes to as at least it was less than the £90 I had paid. A form was emailed to me asking me to sign I was happy with their offer, which I agreed to, only to find the next email said I had agreed I was happy to accept the items at full price, so was scammed twice!!!!!!!! WOW did I feel stupid.

    1. Daniel VandenBurg

      Hello Jane

      Thank you for sharing this with us. No reason to feel daft about this. You won’t have been alone in this and it’s good you are speaking out about it. Often those who fall foul of scams get embarrassed and don’t talk about it at all: “Don’t be rushed, don’t be hushed” is our tagline for Scams Awareness Month this year as you may have already seen.

      You don’t mention how long ago this was. If it was in the past few months or so we would encourage you to fill
      in our survey which also has information at the end about how you could get more involved in our research and help others avoid the same problems.

  8. Marion Biddle

    I fell foul of this scam about 4 years ago. I signed up for a trial of free slimming patches. As said in the article, the banks would not cancel the account, and the company was being difficult. One kind member of staff at the bank advised me to cancel the debit card I had used to sign up for the free trial. Once the card is cancelled the company can no longer take the money.
    It meant not being able to use my debit card for a few days, but it saved me £90 a month.

    1. Daniel VandenBurg

      Hello Marion

      thanks for sharing your experience with us. We are sorry to hear this happened to you.

      Yes cancelling the card is a useful last resort but isn’t ideal. Banks should be honouring such requests to cancel CPAs. This is one of the things we are trying to investigate in our research.

  9. David

    Is there any way to get hold of that infographic without logging in through Google Drive? AFAIK we do not have an official account set up here in Medway so we can’t access it.

    1. Daniel VandenBurg

      Hello David and Natalie

      David: sorry you have had problems accessing the infographic file, we have fixed what we think may have caused the problem, can you let me know if it works now for you?

      Natalie: thanks for pointing this out to us. Premium rate lines can be quite common with scams. Our research may find out more on the point you raised about their use with this type of scam.

      1. David Colbran

        Download is working fine now, thanks!

  10. Natalie

    One of the other problems with these free trial scams is often the terms and conditions to cancel are so specific and arduous that even people who went in with their eyes open can find themselves losing out because the only way to cancel is to call a premium rate number between 1:13am and 1:18am on the 3rd Tuesday of months starting with F, quoting the reference number provided in the pack which will be sent to you 6 weeks after the free trial ends.

    Heck, even reputable companies struggle with free trials: a store card offered me a free trial of a new service, where if I chose not to keep it I needed to ring and give them the reference number included with the welcome pack. I ended up spending a long time on the phone when the free trial neared its end because the welcome pack still hadn’t arrived, so I didn’t have a reference number to give them. The take up for the trial had been so large they’d fallen massively behind shipping out the welcome packs, and by the time mine arrived my free trial would have finished two weeks previously.

    1. Daniel VandenBurg

      Hello Natalie

      thanks for your comments, sorry it has taken us a while to reply to them.

      Yes terms and conditions for subscription trap contracts are very fiddly often and hide the important information such as cancellation terms in very long contracts full of small print. This gets worse if someone is trying to access the contract on a mobile device which then makes them impossible to read.

      We are hoping to shed light on these in our face to face research we are conducting this summer along with how people are affected by subscription traps and the types of problems they face with them

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