Citizens Advice has revealed that one third of payday loan customers have experienced problems with payday lenders taking money from their bank accounts.
Its investigation into the experiences of 665 payday loan customers found that lenders are using continuous payment authorities (CPAs) to do so.
CPAs are regular automatic payments arranged by customers, for example, for gym memberships – but they allow lenders to take payments from an account at any time and they’re used by some payday loan companies to recoup debts without warning.
Payments without consent
Of the third of customers to report problems with CPAs, one in six reported having money taken without their consent, and a further one in six customers claimed that more money had been taken than originally agreed.
Unless a payday loan company has made every attempt to contact a customer about a loan, its not allowed to collect payments from an account.
If you’ve had problems with a payday lender using a CPA, use this letter template to demand that they stop taking money from your account.
According to Citizens Advice, nine-in-ten of the complaints related to the irresponsible use of CPAs have grounds to take the complaint to the Financial Ombudsman.
For example, customers reported money being drawn from their accounts without permission, even after debts had been resolved.
The ombudsman can assist when service or administrative errors have occurred.
Find out more about how to complain to the Financial Ombudsman.