Free trials are becoming the new norms for online retailers! There is no denying that many of us have signed up for a free trial of a product and then eventually forget to cancel it. Once we miss out on cancelling it, we are locked for long and expensive contracts for years, leading to the subscription traps.

Well, these are the subscriptions that we did not even want in the first place.

According to Citizen Advice, the subscription traps are used for a variety of services, and most of the problems are encountered with the products that are advertised online. Further, 84% of the customers who answered an online survey did not realize that they agreed to a subscription.

However, due to all these free subscription traps gaining prominence; Mastercard has stepped in for your rescue.

Mastercard’s New Subscription Rules Are Out

These rules were announced on January 16, 2019, went into action on April 12, and are now helping many consumers under these free trial and offer traps. But these new guidelines are only applicable for the companies selling physical products, not who sell the digital services subscription such as video streaming or cloud storage.

At Mastercard, the organization introduced new subscription rules for merchants so that they can create a hassle-free experience for their customers.

According to the new rule, it requires merchants to get the approval of the cardholder at the ending of the trial period before billing them for the next duration.

  • Merchants are required to send an email or text message to the cardholder stating the transaction amount, date of payment, and merchant’s name along with the instructions on how to cancel a trial.
  • For each payment, the merchant also has to send a receipt to the consumer along with a detailed process on how they can cancel the service if they desire.
  • All the charges that will appear on the statement must also include the phone number of the store from where the cardholder can make the purchase or merchant’s website URL.

How Would It Cost Business Owners?

As these new subscription rules are rolled out, companies offering free trials, discounted subscriptions, and more should now change their notification process.  They also have to contact their payment processor and get more information on this new rule change by Mastercard. 

Along with this, it is going to cost many online retailers as they will lose the ability to accept Mastercard payments. But at the same time, the consequences are not clear if a merchant fails to comply with the new subscription rules.

How It Will Help The Online Subscription Consumers?

We know that online subscription trials let you use the product, explore the features, and allow you to make the most of it.

According to the merchants, the free trial offers are a safe, easy, and legitimate way to increase sales. But Citizens Advice revealed in just three months; the consumers paid an average of $204 dollars for unwanted subscriptions such as television, insurance, online streaming services, and gym memberships thanks to all the times you forgot to cancel the subscription. Although, some of the legitimate use of free trials and small charges do transform the subscriptions into paid, the small amounts add up in a big way over time.

Well, Mastercard’s rules are here to save you your hard earned money.

The new subscription rules will enhance transparency and provide an incredible experience to you. The Mastercard’s cardholders are covered by Zero Liability Policy that protects you from unauthorized charges. However, if still, a cardholder suspects a fraudulent transaction, the customer can contact the bank that issues their card.

Here are some other ways to get around it:

  • Subscription traps are very common. Whether you are browsing the web or looking to make a purchase, be aware of the links that may lead to you a free trial.
  • Have an eye on the offers that look too attractive to be true. Check that the terms and conditions are not pre-ticked below the form.
  • You usually have 14 days to get your money back if you ended up buying the subscription online.
    • Do not confuse them with free debits as they come with strict rules around them.
    • Read the contracts before you agree. For example, some of the free trial contracts come with automatic deduction after the trial period has ended.
    • As you begin to sign up for the services, ensure that you know the nature of subscription.  Further, be aware of the financial commitment for which you are signing up.
    • Don’t stop your subscription without checking all the rules as you might end up paying the cancelled payments as well.
    • Know your cancellation rights. Each online retailer comes with its cancellation policy. So, it is not necessary that they will have to offer you the rights to cancel your free trial period early or later. You can cancel the free trial period any time you want.
    • At last, always try your best to cancel the trial within the set amount of time.

    Note- Under Section 75 of the Consumer Credit Act, you can get a refund if the billing amount is at least £100. However, if the cost was under £100, you can get a refund with Chargeback, but you only have time duration of 120 days to file your claim.

    But in both of these instances, you will have to specify which service you did not receive for the subscriptions. Canceling it won’t be enough.

Summing Up

With all the free trials and subscription offer scenarios, it comes as no surprise that a free trial can unknowingly turn into a recurring charge that is nearly impossible to cancel. These kinds of situations come as frustrating for retailers, banks, and consumers.

Mastercard hopes that their new initiative will prevent the stress that many consumers have to face after they find themselves paying the “grey charges.”