Direct Debit - How does it work?

2

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  • Bossyboots
    Bossyboots Posts: 6,746
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    Agree with the others, contact your bank.
  • iceicebaby
    iceicebaby Posts: 3,633
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    Under the direct debit guarantee, and I quote!

    if an error is made by either the company or the bank, a full and immediate refund is given by your bank.

    The bank then claim this money back from the company who will then pursue you for it or not.
    Baby Ice arrived 17th April 2011. Tired.com! :j
  • MickKnipfler
    MickKnipfler Posts: 1,983 Forumite
    So If I cancel my membership and they confirm and then continue to take the money, is that a "mistake"?

    Am I right in believing that with a DD, the company takes the money and can vary the amount which is different to a Standing order where the bank controls it?
  • Moonbeam
    Moonbeam Posts: 490 Forumite
    With a Direct Debit the company is generally in control of taking the money and can take set or variable amounts.

    A standing order is a regular payment you set up yourself for a set amount, so you are in control of the payments.

    When cancelling Direct Debits contact the company and the bank to make sure that no further funds come out of your account.

    Your bank can fill out a Direct Debit Indemnity Claim form for any payments made in error - this means the money goes back into your account and the bank persue the company for the funds.
  • Am I right in believing that with a DD, the company takes the money and can vary the amount which is different to a Standing order where the bank controls it?
    Sort of.

    Direct Debit: The company receiving the money pulls however much they want out of your bank account when they want to (well - within limits - they have to give you notice of changes.) You can cancel the DD at any time (but you should give notice to the company aswell.)

    Standing Order: You decide the amount and the date, and you push it out of your account. You can cancel the SO at any time.

    Continious Payment Authority (CPA): Usually associated with credit cards, but applies to some bank accounts. Acts like a Direct Debit, with the major exception that you cannot cancel it yourself at the bank (not can the bank themselves cancel it) - you must get the company taking the money to cancel it.

    The difference between DD and CPA is which number(s) you give the company off your bank card. If you give the sort code and account number it's a DD, if you give the 16 digit number across the middle, it's a CPA.
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  • Thanks guys,

    I phoned the bank this morning and they said complain to the company, if that doesn't work fill out the indemnity form
  • YorkshireBoy
    YorkshireBoy Posts: 31,541
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    If I want to cancel, who do I have to contact; the bank or the trader?
    From the BACS website...
    Q. How do I cancel a Direct Debit?

    A. If you need to cancel a Direct Debit, simply write to your bank or building society. It is also a good idea to send a copy to the organisation concerned. Your bank or building society can make the cancellation up to and including the due date, but try not to leave it until the last minute or you run the risk of a payment being made. Remember that cancelling the Direct Debit simply stops paying the organisation. If you carry on receiving the goods or service then you will have to organise an alternative payment method.

    http://www.bacs.co.uk/BPSL/directdebit/generalpublic/faqs/DC_public_FAQ.htm#Q11
  • JohalaReewi
    JohalaReewi Posts: 2,614 Forumite
    Thanks guys,

    I phoned the bank this morning and they said complain to the company, if that doesn't work fill out the indemnity form

    That is not how the DD guarantee scheme works. If money has been paid by DD out of your account and it was either the wrong amount, or too early (or both) you are entitled to a full and immediate refund from your bank. The bank are not allowed to tell you to take itup with the other company, or make you wait until their indemity form has gone through the works. BACS official line on the definition of immediate is 'within 24 hours'.

    You said "I cancelled with the trader but they continued to charge me. They acknowledge that I cancelled my membership but say I should have cancelled with the bank". This would suggest that you were not expecting to pay any more but payments were taken so, this is covered by the DD guarantee scheme and your bank should refund immediately.

    You are sure it was a DD and not a CPA?
  • Its called an "Indemnity Claim", the bank have no option but to comply with refunding any dd's paid from your account in error.
  • MickKnipfler
    MickKnipfler Posts: 1,983 Forumite
    Thanks Guys,

    I cancelled it yesterday and it definately said Direct Debit. My confirmation letter from the health Club also said "Your last Direct Debit Payment will be on"
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