In some cases, however, consumers report having trouble stopping these automatic charges. For example, a consumer may decide to use a different payment method for future payments, or they may want to stop a single payment because they lack enough money in the account when the payment is scheduled. A consumer may decide after authorizing a merchant or lender to make withdrawals from their account that they want to revoke authorization. Under federal law, consumers have the right to stop automatic debits from their account. To help ensure that consumers are informed, the CFPB encourages companies to provide a copy of these terms prior to initiating the first auto debit, when practical. This information can include the amount the consumer agreed to, the recurring nature of the debits, and the timing of the payments. Companies must also keep clear records on what the consumer has authorized and provide consumers with a copy of those terms. The bulletin stresses that the Bureau expects all companies to get required consumer authorization before automatically debiting a consumer’s account. In some cases, consumers have also reported companies not obtaining proper authorization to auto debit an account. If consumers are not given clear information on the terms of auto debits, they may not be able to manage payments or ensure their account balance is large enough to avoid being hit with overdraft or non-sufficient fund fees. Also, through its supervisory work, the CFPB observed that one or more companies provided consumers with a notice of the terms for preauthorized auto debits that failed to disclose critical information, such as the amount and timing of the payments the consumer agreed to. The CFPB is concerned that some companies may be failing to meet the legal requirements for obtaining authorizations from consumers for recurring auto debits. Industry Guidance: Authorizing Auto Debits Companies, however, must obtain required consumer authorization before debiting an account. To ensure that payments are timely, companies often seek out consumer permission for these preauthorized charges. Millions of consumers authorize companies to automatically deduct payments from their deposit accounts for recurring expenses such as subscriptions, memberships, a mortgage, credit card, or other monthly bills. They can use our action letters or submit a complaint to the Bureau if they are having problems managing or stopping auto debits.” “Consumers also have the right to stop these charges at any time. “This bulletin makes clear that companies must get a consumer’s authorization before automatically debiting their account,” said CFPB Director Richard Cordray. In addition, the Bureau is publishing action letters today for consumers seeking to revoke a company’s authorization to auto debit an account. The bulletin also reminds companies that they are required by law to provide notifications to consumers that clearly describe the terms of preauthorized auto debits. Today, the Consumer Financial Protection Bureau (CFPB) issued a bulletin alerting companies that they must obtain authorization before automatically debiting a consumer’s account. Bureau Publishes Action Letters for Consumers Seeking to Stop Auto Debits
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