Mastercard cracks down on 'free trial' subscriptions

Mastercard cracks down on 'free trial' subscriptions

Mastercard is changing its rules to stop merchants using free trials as a ruse to charge for hard-to-cancel recurring subscriptions.

The rule change will require merchants to gain cardholder approval at the conclusion of the trial before they start billing. To help cardholders with that decision, merchants will be required to send the cardholder - either by email or text - the transaction amount, payment date, merchant name along with explicit instructions on how to cancel a trial.

For each payment thereafter, the merchant will have to send a receipt to the cardholder for each transaction by email or text message with clear instructions on how to cancel the service if the consumer so desires.

In addition, all charges that appear on the cardholder’s statement must now include the merchant website URL or the phone number of the store where the cardholder made the purchase.
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Comments: (5)

David Gyori
David Gyori - BANKING REPORTS, LONDON - London 17 January, 2019, 11:09Be the first to give this comment the thumbs up 0 likes

Yes, this is very good and absolutely needed.

This is a nightmare from a consumer standpoint! 

Also: banks should be able to immediately group and filter and project to the client the recurring payments. 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 January, 2019, 17:46Be the first to give this comment the thumbs up 0 likes

Cardholder-friendly move by MasterCard but, if Visa doesn't follow suit, Merchants could insist that trial signups must use only Visa credit cards. Already many of them don't permit free trial signup via debit cards or bank transfers, so what's one more exclusion, eh?

Sheamus Bridges
Sheamus Bridges - ANZ - Singapore 18 January, 2019, 04:23Be the first to give this comment the thumbs up 0 likes

Good consumer focus from MasterCard. Adding URL to the transaction detail is way overdue. The issusing banks should push the other schemes to follow suit. 

A Finextra member
A Finextra member 18 January, 2019, 05:401 like 1 like The EU psd2 payment directive and its complement rules on strong customer authentication should take care of the issue in Europe by setting new rules on how customets must approve electronic payments. Valid from 14 sep 2019. Customer will also get a refund from the issuer in one business day if each transation was not securely approved by himself. The acquirer and its dodgy merchant will own the problem.
Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 January, 2019, 18:152 likes 2 likes

TIL that MasterCard's new rule is only applicable for free trials of physical goods. Kate Fitzgerald predicts in PaymentsSource that MasterCard's move might spark consumer backlash, forcing the company to extend this rule to digital subscriptions as well. But, as things stand, it's only for physical goods. Maybe it's only me but I can't think of the last time I signed up for a free trial for a physical good. 

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