Recent findings from the CPC Network have brought to light concerning practices regarding recurring subscription payments in the European Union (EU). These practices have led many customers to unwittingly sign up for unwanted subscriptions.
It was discovered that 10% of EU consumers have fallen victim to such unwanted subscriptions in the past. In response, the European Commission, in collaboration with the CPC Network, worked with major card schemes like Mastercard, VISA, and American Express to introduce new rules that promote clarity and informed decision-making for consumers.
As part of this process, the card schemes have implemented stricter guidelines for merchants. For example, online businesses offering subscriptions must now clearly explain the subscription terms to consumers when they are making payments through these credit card companies. In addition, Mastercard, VISA, and American Express also agreed, as advised by the CPC authorities, to require merchants to present information about the subscription in the same window where consumers enter their credit card details for their purchase or trial that leads to a subscription. The main aim is to prevent situations where customers think they are making a one-time purchase but actually end up with a subscription. For more specific details on the measures taken by each card company, please see the information below.
- Mastercard’s New Disclosure Requirements:
Merchants using Mastercard services are now obligated to disclose subscription terms at the same time they request card credentials. The disclosure should include the subscription fee, the billing frequency, and, if applicable, details about any trial periods (e.g., this includes information about any initial charges, the duration of the trial period, and any subsequent price and frequency of the subscription).
- VISA’s New Disclosure Requirements:
VISA requires merchants to clearly display the length of any trial period, introductory offer, or promotional period, and transaction amounts. This information should be visible on the webpage where customers enter their card credentials and at the checkout. Additionally, the transaction amounts should include the amount due at the time of purchase, even if it is zero, and the amount and fixed date or interval for each recurring transaction.
- American Express’ New Disclosure Requirements:
Merchants using American Express must now clearly disclose all essential terms of the offer, including the presence of recurring billing charges that will continue until cancelled. In cases where there is an introductory offer, merchants should send the cardholder a notification before initiating the first recurring billing charge, providing them with a reasonable amount of time to cancel if desired.
Next steps:
The CPC Network is actively monitoring the implementation of these measures to ensure compliance among merchants. National authorities will also take appropriate action if any additional issues, gaps or non-compliance are identified. As online business owners, it is crucial to familiarise yourself with these rules and integrate them into your online payment processes to protect consumers and avoid any sanctions and fines.
Isadora Werneck – Partner – isadora.werneck@loganpartners.com
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