News Article

Budget 2017 - avoiding free trial traps could get easier soon

Published 9 March 2017 by

It can be so easy to end up paying for a service you don’t want, just by signing up for a free trial. If you don’t read the full terms and conditions, you might not realise that after the free trial ends, you can be stuck paying for something you didn’t want.

But a new plan from Chancellor Philip Hammond could be set to change all that. In yesterday’s Spring Budget 2017, he unveiled a crackdown on the way that free trials operate – and how they can cost customers. We’ll take you through what these changes could mean for you and how you can avoid a free trial trap.

What is a continuous payment authority?

When you sign up to a free trial, the service will sometimes ask you to put in your card details. This should be the first warning sign that it’s not actually a free trial – you’re probably signing up for a continuous payment authority.

A continuous payment authority is similar to a Direct Debit – you give a company access to take money out of your account. But with a Direct Debit, the company can only withdraw money on a specific date, usually monthly. With a continuous payment authority, the company can take as much money out of your account as they want, whenever they want.

You might sign up to a continuous payment authority when you get a magazine subscription or service like Netflix. Most people don’t realise that they’re agreeing to a continuous payment authority when they sign up for a free trial. But by putting in your card details and clicking to accept the terms and conditions, you’re actually agreeing to pay for the service at the end of the free trial.

What do the new changes mean?

The Government wants to stop people paying for subscription services when they don’t actually realise that’s what they’re doing. Under the new measures in the Spring Budget 2017, companies who use continuous payment authorities might not be able to do this anymore. When services offer a free trial, they won’t be able to ask for customers’ card details.

There’s no date yet when we’ll see these plans in place – the Government is still consulting on how it will actually put them in force. But hopefully over the next few months we’ll see things become a bit clearer, so it should get easier to stay away from the free trial traps.

Before subscription services stop operating in this way, it’s a good idea to look carefully at the terms and conditions when you sign up for anything. And even if you’re only signing up for a free trial, you should be wary if the service asks you to put in your card details.

In some cases, your bank should be able to help you cancel a subscription service after you’ve finished the free trial so you don’t end up having to pay. If you’re a thinkmoney customer and this has happened to you, get in touch with us and we can cancel the payment for you.

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