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Mastercard policy changes prevent companies from auto-billing you after a free trial (updated)

By Polycount ยท 13 replies
Jan 16, 2019
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  1. Since free trials first became popular, people have always fallen victim to one of the oldest sales tricks in the book - auto billing. We all know the drill by now: you sign up for an as-seen-on TV product trial, and you forget to cancel your subscription.

    In many cases, you probably don't even realize the trial is over until you've already been billed for another month.

    Some may argue that it's purely the customer's role to monitor and cancel unwanted subscriptions, but it seems Mastercard disagrees. Policy changes announced by the financial company today put the burden of responsibility firmly on the shoulders of merchants who use post-trial auto-bill tactics.

    Specifically, such vendors will have to request "official authorization" before recurring subscriptions can take effect. Furthermore, companies will be required to send customers detailed monthly receipts with payment due dates, amounts, service names, and information regarding how said customer can cancel their subscription should they so desire.

    As consumer-friendly as these new rules are, it's worth noting that they only apply to Mastercard customers for now. That said, there's always the possibility that merchants will comply with the rules across the board for the sake of simplification; much like several tech companies have chosen to do with the GDPR.

    Update 1/17/2019: A Mastercard spokesperson has reached out to clarify that their new policy change only applies to subscriptions for physical items, such as skin care goods or dietary supplements, and not digital services like Netflix. The article has been updated to reflect this information.

    Permalink to story.

    Last edited: Jan 17, 2019
  2. wiyosaya

    wiyosaya TS Evangelist Posts: 3,979   +2,282

    Sounds like a win for the common person.

    However, I bet that there will be merchants that still try to subvert this by auto-checking a check-box that specifically authorizes them to continue to charge after the trial period is over. And I would not be surprised if that checkbox is somewhere not so noticeable.
  3. ckm88

    ckm88 TS Addict Posts: 166   +119

    Ah, this is great news for the forgetful people. Although I'm not forgetful, this is a nice feature to have.
    Underdog, MaXtor and wiyosaya like this.
  4. Lew Zealand

    Lew Zealand TS Guru Posts: 671   +563

    This is a positive for consumers and great PR by Mastercard. Well played.
  5. ShagnWagn

    ShagnWagn TS Guru Posts: 726   +559

    Wooo! THANK YOU MC! I can still see it being abused, but some kind of reminder would be swell. I did a nutflix trial and didn't get any kind of notification when they charged me. No monthly bill or statement, no reminder - nothing. I had to waste my time to contact them and cancel it manually. Side note - netflix... only 2-channel audio? in 2019? Really??
    wiyosaya likes this.
  6. wiyosaya

    wiyosaya TS Evangelist Posts: 3,979   +2,282

    If you are on Windows and use the Netflix app, you have a choice of Dolby Digital+.
  7. TomSEA

    TomSEA TechSpot Chancellor Posts: 3,124   +1,617

    Although this is definitely nice for the consumer - and I hope other cards follow suit - but I don't think MasterCard is doing this out of the kindness of their heart.

    Think of the manpower and time wasted (meaning $$ spent) for when they have to deal with customers contesting charges that show up after free trials. Literally probably runs them in the millions of dollars per year.

    This policy now nips that in the bud.
    jobeard and m4a4 like this.
  8. Uncle Al

    Uncle Al TS Evangelist Posts: 5,389   +3,776

    Excellent! Kudo's to Mastercard!
  9. paul s2

    paul s2 TS Member Posts: 20

    It never was a freee trial if it comes with auto bill.
    but I see mastercards use case is customer calls hey I got charged.
    they they have too look up number of biller to pass on to customer.
    this take time cost money.
  10. Stark

    Stark TS Addict Posts: 119   +98

    So many gym membership cried out and then were silenced forever.....
  11. StupidPeopleSuk

    StupidPeopleSuk TS Rookie Posts: 17   +7

    Hopefully, this will put a final nail in the coffins of the companies that pull this crap...

    Last year, I had to call my CC company 3 times to get a certain company banned from charging my MC for stuff I never ordered or subscribed to.

    The 1st time, the bank cancelled my card & sent me a new one. 1 month went by and somehow the offending company starting charging me on the new card.

    When I called the CC company & asked how they got my new CC number, they had no answer, but they again cancelled the new card and sent me another new one.

    The charges stopped for 1 month, then last week, I saw them STILL attemting to charge me again, the only difference now being that MC automatically denied the charges.

    So I had my attorney send a very strongly-worded hard-copy letter to MC & my bank, demanding an explanation of how the offending company continues to get hold of my new card numbers and attempt to charge me for their services....and that I will now be charging MC and my bank for not only my attorney's time but mine also until this is resolved to my satisfaction....
  12. wiyosaya

    wiyosaya TS Evangelist Posts: 3,979   +2,282

    I had someone steal my credit card last June and then use it for a membership to LA Fitness - including paying for several back months that they owed. I called my bank, and I called LA Fitness. LA Fitness told me that they would refund my money and that they would get my card out of their system. LA Fitness also told me that the individual that had used my card had "used several different credit card numbers". Gee, I wonder where he got them from? :facepalm:

    I also told my bank about it, and they said that they would prevent LA Fitness from using my card. The bank sent me a new card and a new number, so I thought that I was through with this. And while on the phone, my bank asked me, essentially, maybe someone used the card that you had given permission to use the card to which I said NO, and grilled me about whether I had ever had an LA Fitness membership. Like I would be calling them if I gave permission to for someone to use my card, or if I had legitimately signed up as an LA Fitness member. :mad:

    Then, the next month, there is the charge again for LA Fitness, this time, it is for the charges they had refunded and for the next month, too. I called the bank yet again and this time I got someone on the phone who actually knew how to permanently deny LA Fitness any use of my card, yet they still had to send me a new card again. I called LA Fitness again, and they also refunded the charges again.

    Finally, the next month comes along, and LA Fitness yet again tried to charge my card. So I called my bank again and they assured me that the charges were denied. A few days later, the pending charges dropped off my card. Now, LA Fitness could never charge this card - not that I care. I looked into them and they sound like a nightmare for members that quit.

    Your bank knows exactly why this merchant was able to charge your card as they did mine - this is because merchants are allowed to tell them that your payment is a subscription - without your permission - and they automatically get your new credit card number. It is a "feature" that MasterCard and Visa both offer. F'ers. So it does not surprise me that whatever company you were dealing with for the trial flagged your account as a subscription.

    IMO, it is extremely unfortunate that this does not, as the update to the article says above, apply to every and any subscription. All of this will certainly make me extremely cautious about signing up for any subscription in the future.
    Lew Zealand and Stark like this.
  13. Bpsti

    Bpsti TS Rookie Posts: 18   +7

    I cancelled a card and then got a bill from them 3-4 years later for a unreturned blockbuster movie (BB was nearing the end of its life at this point). I called the company and asked them how the heck someone was able to charge a card id cancelled years ago!? The CC company more or less told me "bummer. If the merchant is big enough they can do whatever they want".

    So apparently even if you do cancel a CC it never actually goes away. If a big enough merchant thinks he has a legit reason to charge your card then it comes back as a zombie credit card and you get a bill in the mail.
  14. GirlDownunder

    GirlDownunder TS Booster Posts: 109   +33

    Free trials should be just that- free. I don't appreciate having to hand over my info, risking getting my identity stolen, just to have a try at yet another software-- it's ridiculous!
    wiyosaya likes this.

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