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MasterCard wants to stop companies from using sneaky re-billing tricks

Hopefully, this stops all those “supplements” scam artists.

mastercard logo
Image: PYMNTS

Maybe you’re like me and still reeling over MasterCard’s recent logo changes, and have forgotten to cancel that ‘free trial’ membership you started over the holidays. That’s okay, as going forward, MasterCard will protect users against companies charging you once that trial expires.

Announced today, a new policy will require merchants have authorization from you before a recurring charge for a subscription can be added to your bill. The policy also compels companies to provide you with a more transparent approach to pricing, with monthly fee updates and clear instructions on how to cancel if you so desire.

[Update] When transparency fails

Apparently, MasterCard needs to take its own medicine and learn some transparency of their own. Their original blog post (reproduced below) talks in vague, general terms about “merchants” and “product,” without making any distinctions between physical and digital products.

The blog post is now updated to explicitly state only physical products, putting the kibosh on your dreams of hassle-free digital free trials. Speaking to The Verge, a MasterCard spokesperson said that most of the complaints they field are to do with items like “health care products, skin care products, vitamins,” all the usual fare for snake oil salesmen out to make a quick buck or two.

I can’t help but feel that something else is going on here. Admitting their mistake brings negative PR at a time where they’re trying to do a good thing. Why not just expand their aim to include digital as well?

For now, you’re stuck canceling your own damn digital subscriptions. For everything else, there’s MasterCard.

mastercard's original blog post about the new trial subscription policy

Screenshot: The Verge

More about the new changes

When you use your MasterCard to sign up for a free trial of a service, the protection automatically kicks in. That means the merchant needs to send you a text or email at the end of the free trial, notifying that you have to pay to continue the subscription.

That message must contain all the relevant information, such as subscription cost, payment date and the actual name of the merchant. No more can companies hide behind multiple layers of names or payment processors. That message also has to have clear instructions on how to cancel in the event you decide the service isn’t worth it to you.

But wait, there’s more

The protection goes further, with merchants needing to send you monthly receipts to show the true cost once you do opt-in to the recurring payment.

It will help guard against the horde of sketchy diet pill and other supplement merchants that hook unsuspecting buyers into a free trial, only to hike the price to insane levels in the first installment. And yes, those monthly receipts must also show clearly how to cancel the subscription.

Hopefully, this makes signing up for trials safer and less of a headache for shoppers.

What do you think? Happy to see credit card companies working on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

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Maker, meme-r and unabashed geek. My hobbies include photography, animation and hoarding Reddit gold.

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