
Mastercard Bans Automatic Billing After Free Trials - ceejayoz
https://www.pcmag.com/news/366051/mastercard-bans-automatic-billing-after-free-trials
======
everybodyknows
From the linked blog posting:

>The rule change will require merchants to gain cardholder approval at the
conclusion of the trial before they start billing. To help cardholders with
that decision, merchants will be required to send the cardholder – either by
email or text – the transaction amount, payment date, merchant name along with
explicit instructions on how to cancel a trial.

[https://newsroom.mastercard.com/2019/01/16/free-trials-
witho...](https://newsroom.mastercard.com/2019/01/16/free-trials-without-the-
hassle/)

Note the "... instructions on how to cancel a trial". I read this as
signifying auto-charging commences at end of the trial. And merchants can
continue forcing customers to jump through whatever hoops they had set up
already. The only new requirement from MasterCard is sending of an email
shortly before the auto-charge.

Am I wrong?

~~~
Animats
No, you're right. MasterCard is grossly misrepresenting (i.e. lying about)
what they are doing. It's opt-out, not opt-in.

~~~
SOLAR_FIELDS
True, but what they are implementing is still a significant improvement over
the status quo. The simple notification is going to cut into the profits of
many companies banking on people not bothering to check when their trials are
over. While MasterCard might be misrepresenting (read: overselling) what they
are doing, the new situation is undoubtedly a net benefit over the current
situation.

------
timdorr
This is from January: [https://newsroom.mastercard.com/2019/01/16/free-trials-
witho...](https://newsroom.mastercard.com/2019/01/16/free-trials-without-the-
hassle/)

Also, it only applies to physical products.

~~~
hanniabu
What kind of physical products have monthly subscriptions and start with free
trials?

~~~
soneca
I got tricked into a very dark-patterned coffee subscription company called
Amora Coffee.

I got one of their coupon with a Hello Fresh box. Which, by association, at
the time increased my trust in this Amora Coffee company. And now, after being
scammed, only ruined my trust in the Hello Fresh company. Never bought it
again, never will, and will tell everyone who asks not to buy.

I will try to list all the dark patterns that I remember but you can google
"Amora Coffee scam".

First, they present themselves as a regular e-commerce selling coffee. They
offer a coupon for a free first purchase.

The site seems legit enough and they only ask you to pay $1 for delivery fee.
It seems a great deal, even if the coffee is not that good, worth trying it.
You even think that they must have a really good product to offer a free full-
sized sample. Their conversion rate must be phenomenal at this step.

But in that step alone there are two parts of the scam already.

You realize them only after you paid. In the receipt, if you took the time to
read it and pay attention (how often do people really read the receipt of what
they just purchased?), you learn that you just signed up to a subscription!!
You are not just buying one bag, you are paying a subscription and, unless you
cancel, you will be charged full price soon enough.

The $1 dollar fee is that they need your credit card to be able to charge you
the recurrent fee before you know it is a scam (you will know soon enough).
They probably charge $1 just to avoid trouble with the credit card companies
(they will have a first legitime, undisputed payment after all).

The subscription itself is another step of the scam. You pay every two weeks,
not every month as it's the common practice. Also, they claim that to not be
charged, you have to cancel the next delivery before it has shipped. In
practice, it all means that you have to cancel the subscription (that you
never knew you had signed up to) in a week, which is even before the first
"free" delivery has arrived.

So, I was savvy enough to get the scam in time by reading the receipt and
googling "Amora Coffee scam". So, I just would cancel immediately.

How do you cancel? You have to go to their site, log in into your account and
cancel there.

Ok, the scammers have not given up stealing my money just yet. To my surprise,
the email I used to make the first purchase is _not_ my username to log into
their site. I have yet to create an account. To do that I have to input my
email and a numerical code that is hidden in the receipt that I got. It is
there, but you have to find it with no help at all.

Did I just jumped all the obstacles that the thieves were putting in front of
me? No! The "create your account" form just didn't work!! Looking on online
reviews you notice that that form is not working for over an year!!

It is impossible to cancel your subscription.

So I find a email, send a very straightforward message telling them to cancel.
So I have not being charged. Apparently I avoided the scam. Still, they got
that first $1 of mine from the initial purchase. Probably what they bribed
Hello Fresh with to steal from their customers.

~~~
judge2020
The $1 fee is generally standard to see if your card is legitimate.

~~~
leetbulb
Generally it's a pre-auth on the card to see if it's legitimate and it will
fall off after some time. If they actually capture it, their devs are either
being lazy or they really want that $1.

~~~
soneca
The fee was stated as the "delivery fee", it was not a check, but a payment

------
bythckr
Wouldn't it be better if mastercard directly or via the issuing bank gives the
customer an option to revoke permission to auto-charge based on vendors or set
limits on how much each vendor can charge during a 30 days period?

~~~
hombre_fatal
One of the things I like about Paypal is that I have a list of entities
authorized to pull money from my account and I can simply revoke them.

It's a critical tool for managing your finances.

~~~
csommers
Paypal is THE absolute worst place you can have money stored or linked.

~~~
hombre_fatal
Yet they offer this critical feature that neither my bank nor credit card
offer.

Nobody in the space is batting for you, btw. Just pick your poison. I once
used a bank that would reorder by purchases to maximize their $35 overdraft
fees.

> A Pew Charitable Trusts report from December 2016 said that, at that time,
> more than 40 percent of banks in the U.S. shuffle transactions to maximize
> overdraft fees.

The fact that you and I both can come up with examples where Paypal sucks
(like account freezing) is only evidence for how bad US financial services are
where people like me still gleefully use Paypal.

And the authorized billing system is one thing Paypal got right.

~~~
Something1234
As an aside wouldn't the way to maximize overdraft fees be to apply
transactions in sorted highest debit to lowest, and only then start to apply
deposits. It wouldn't be so dark if they just mention it as how they do the
fee charging.

~~~
mindslight
Yes, that is exactly what Bank of America used to do, including putting an
overnight hold on cash given to a teller. Regardless of what the fine-print-
nobody-reads said, it was "dark" and illegal and eventually stopped due to a
class action lawsuit.

(One of) their current scam(s) has gotten a bit cleverer in that they don't
actually break the law themselves but rather just induce their customers to
commit check fraud - if you receive a check drawn on Bank of America and
present it in person at one of their branches, they won't honor it for the
full amount!

------
Zamicol
I worked for Jeremy Johnson in Utah. He stole millions from people doing
exactly this.

[https://blog.zamicol.com/2018/03/mormons-polygamists-and-
eva...](https://blog.zamicol.com/2018/03/mormons-polygamists-and-evangelicals-
my.html)

~~~
CamelCaseName
Wow, that's an incredible story. Kudos to you for getting to the bottom of it.

------
ec109685
More details on Mastercard and Visa’s policy:
[https://midigator.com/blog/free-trial-rules-how-does-
masterc...](https://midigator.com/blog/free-trial-rules-how-does-mastercards-
policy-compare-to-visas/)

------
ghusbands
The title really needs changing, since it's a lie, according to the top-rated
comment.

------
dghughes
Even something like Grammarly should be managed better. They offered something
like $8/month which was OK and I assumed was set until I changed it. But then
suddenly I was billed for a full year which I was not expecting.

I hadn't noticed for a few months since I went back to college and missed the
three month grace period. It took a lot of back and forth negotiating before I
got only 50% of the fee back.

Grammarly is a very aggressive company. And even worse I saw mistakes in the
suggested corrections. The only thing I liked was the plagiarism detection
feature.

~~~
benbristow
That seems like a lot of money for a glorified spell checker / keylogger

------
remotecool
Well, the solution for most companies will be no more free trials.

~~~
Spivak
I mean if the reason you offer free trails is to make money on people
forgetting to cancel then it’s probably best to just not offer a trail.

If you’re offering a free trail to actually let customers evaluate your
product then you’ll probably be unaffected by this.

~~~
unreal37
The purpose is not to "make money on people forgetting to cancel."

The fact of the matter is that many more people buy when a free trial is
offered. If your competitor offers a free trial, and you don't, they get more
sales than you.

It's "risk reversal". Similar to a "30 day money back guarantee". People are
attracted to the idea of there being no risk to trying this and not liking it.

In some industries, you simply HAVE to offer it.

~~~
benologist
There is a really simple workaround -

    
    
         if (person_abandoned_trial) {
            dont_pretend_they_consented_to_lifetime_billing()
         }

~~~
judge2020
I think a better one is to just never auto-charge after the trial, and lock
down your service asking them to start a plan for the main service after the
trial.

------
endlessvoid94
Is this just a policy change? How could they enforce this?

~~~
sibartlett
They can enforce it by revoking the merchant’s access to the Mastercard
network.

~~~
adrianmonk
Which, for a merchant, if it happens, is damn near a death sentence. If you
can't accept payments from Mastercard anymore, your business is pretty
screwed.

So in practice this works mostly by deterrence. They rarely have to actually
drop the hammer. Most merchants will comply well before it ever gets to that
point.

------
beyondcompute
It’s just great! I think, it’s a very useful initiative!

