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Disappointed woman with credit card in hand in front of a laptop
A "free" offer, a "non-binding" trial period, a "one-time order" - you were quickly taken in by a subscription trap. Image: Fizkes / Shutterstock

Credit cards versus subscription traps

Subscription traps are usually tricked by pretending that it is a trial period that can be cancelled at any time and is free of charge, or by making a tempting offer in which there is no mention of a subscription at all. Information about recurring payments is omitted or hidden in the small print. After clicking on an online advertisement, subscription traps make interested customers enter their card data on landing pages. Here on the order page, however, they are only shown the costs for what is supposedly a one-off order. Unaware of this, customers then finalise the payment process and click their OK. Surprise follows when the continuous debits are discovered and also the annoyance about the hassle of getting rid of such a subscription. An important measure has now been taken against this scam - throughout the EU.

The background for the action is the EU's effort to do something about the fact that more than half of all EU citizens have already fallen for scams on the internet. According to a recent study, one tenth of these victims have fallen into the traps that lead people to take out unwanted subscriptions.

Don't let rip-off companies have their way

The European Consumer Protection Cooperation (see our CPC brochure) has been fighting this practice since 2017 and has since tried to find a solution with the market leaders Visa, Mastercard and American Express. The European CPC network investigated the implementation of specific rules for the authorisation of card transactions by the three major payment networks. Result: Transactions with regular follow-up payments were systematically authorised by card providers against the rules of the Payment Services Directive and also the Unfair Commercial Practices Directive.

Years of tug of war

Since the business models of most subscription traps rely on fully automated debits, and since credit card companies make money on every transaction, this results in a constant and tempting flow of capital for the payment services, which are in themselves reputable. Apart from the fixed monthly fees of their end customers, credit card companies mainly earn money by collecting interest on late payments. Secondly, they also collect money from merchants who accept the card. So-called interchange fees are charged for every transaction. These fees are paid to the bank that issued the card to cover the risks, costs and potential fraud that card issuers may face with each card transaction. They vary in amount depending on the brand and type of transaction, from 1.15% to 3.25%. In addition, credit card companies also charge merchants an assessment fee for processing transactions. 

In short, even dubious subscriptions generate profits for credit card companies. This may have played a role in the lengthy implementation of this case. The three credit card companies played for time, an agreement between CPC negotiators and Mastercard was reached last summer. The other two followed suit and agreed to the following voluntary commitments around the turn of the year:

Stricter info obligations

In the course of this action, American Express introduced stricter rules for merchants, including the obligation to send customers a reminder about the first subscription fee. Mastercard and VISA, on the other hand, went a step further by instructing merchants in detail in which specific window information about subscription payments has to be shown, thus ensuring that the new rules can hardly be circumvented. It is important to agree that merchants always display information about recurring subscription fees in the window where consumers enter their credit card details for the first purchase or trial period. Customers must therefore be informed at the very beginning of the payment process that they are about to take out a subscription.

The three financial groups are now under the scrutiny of the CPC supervisory authorities, which are actively monitoring the implementation of the commitments made.  National authorities will take further action in the member states should additional problems be identified. We hope that other credit card providers will also improve for competitive reasons, as this new protection mechanism for subscriptions is attractive for card users and may well speak for or against choosing a certain credit card brand.

    Mastercards fanned out with brand logo
    Image: David Cardinez / Shutterstock


    Trader must now show subscription conditions at the same time as requesting the card data. Must include:

    • Price according to invoice
    • Frequency of billing
    • Terms of any trial subscription  (initial fees, duration of the trial subscription, frequency and price of debits of the subscription automatically following the trial period)
    Fanned out Visa credit cards with brand logo
    Image: Kikinunchi / Shutterstock


    Merchant must clearly display duration of trial period, introductory offer or promotional period, transaction amounts both on the webpage where card details are requested and entered and on the checkout page. In addition:

    • The amount due immediately, even if it is zero.
    • Amount and date or interval for each recurring transaction
    American Express credit cards fanned out with brand logo
    Image: ValeryBrozhinsky / Istock / Shutterstock

    American Express

    The merchant must disclose all material terms and conditions of the offer, aditionally:

    • Indication that recurring debits will continue to accrue until the recurring debits are cancelled by the cardholder.
    • In the case of an introductory offer, before the first recurring billing, a written reminder notice with reasonable notice period.

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