Direct DeceptionFar from putting the consumer in control, direct debits are one of the biggest con-tricks of the age With every bill you pay, whether electricity, council tax, house insurance or whatever, the suppliers will encourage you to pay by direct debit. This, so they say, puts you in control. You need take no action, you just sit back and let the supplier take the payments out of your bank account. Nothing could be easier. If the payments change, they'll let you know well in advance. In return for agreeing to these schemes, you are often offered tempting discounts and benefits. So everyone's a winner. But there are very significant drawbacks. For a start, what kind of notice do they have to give you? Two weeks. You could easily miss that if you're on holiday, and if you're not happy about the amount it gives you precious little time to challenge it - and to do so you have to waste your time and pay for post or phone calls. There is also often a tendency of suppliers who reassess monthly charges each year to alter them in a perverse way that doesn't take account of your likely pattern of consumption and will result in you being overcharged or paying too little and being hit with a whacking bill later. This is especially true of telephone bills - one quarter, you might have spent huge amounts phoning Australia, which bump up your annual bill, but you don't want to be paying that rate throughout the next year. A further problem is that it's a form of inertia selling. You may have subscribed to an organisation - CAMRA say - which charges an annual membership fee, but over time lose interest in it. With a direct debit you have to take the initiative to contact them to discontinue your subscription. There is supposed to be a "direct debit guarantee" that incorrect charges will be refunded. But that requires you to check your bank statement against the notifications you've received, which few people are likely to have the time to do. And if, on some monthly bill, they've set your payments a few pounds too high (or too low) for your liking, it hardly seems worth challenging it after the event. I suppose there must be some people who are at the same time so bone idle that they can't be bothered to keep track of their money, and so well-off that their finances can stand a whole series of unpredictable and often perverse charges. But that certainly doesn't apply to me, or anyone else I know. If direct debits had never been invented, no billpayer would miss them, because all the pressure for their introduction came from the banks and utilities, not the consumer. I don't believe that one single consumer would ever have stood up and said "I want to give the Gas Board the right to take whatever money they choose out of my bank account, whenever they want, without getting my authority, so long as they make a token attempt to tell me in advance what they plan to do." People have been conned into thinking that direct debits make life simpler and put them in control. In reality they do the exact opposite. They make it much more difficult to keep track of your finances and to control what is going out of your account. And I suspect the companies who levy direct debits deliberately make them for odd sums of pence so that it is harder to log them. If it was up to me, I would ban them. But, given that that is unrealistic and could be portrayed as a denial of consumer choice, it should be illegal for suppliers of services to give those who agree to them any advantage over consumers who don't, and they should also have to give at least a month's notice before they change payment amounts and provide a reply-paid envelope or free telephone line for any queries. (April 2000) |