Preventative measures target consent, hidden autopayments at the source

Rumble strips

It happened a while ago – back in January – but it’s worth noting now as the policy goes into effect: A major credit card company is putting novel provisions in place to restrict free-trial subscriptions.

Mastercard’s new policy throws speed bumps in front of merchants who use a free-trial consent as the gateway to automatic payments.

Mastercard-approved merchants will be required “to gain cardholder approval at the conclusion of the trial before they start billing,” the company announced. “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.”

Additionally, the merchant is required to provide email or text receipts for each transaction after the initial sign-up. These communications must also be accompanied by clear instructions on how the consumer can cancel future payments, and the cardholder’s statement must also include the merchant’s URL or phone number.

The takeaway

It will be interesting to monitor the effects of this policy in the coming months, as it represents a real change in both the source and scope of automatic renewal restrictions. These requirements go beyond the law of even the most aggressive states, such as California or Vermont, and require virtually all merchants offering free trials to comply because of the ubiquity of Mastercard. The importance of Mastercard and Visa to consumers, even more so for online shopping, puts them in a position to become the most important regulators in this field.