Mastercard to help customers avoid automatic billing following free trials

Mastercard is launching its own crackdown on free trials that can leave consumers with difficult to cancel recurring subscriptions.

The payments provider, which has more than 600 million customers with cards worldwide, is launching a new notification service that will warn people when their free trials are coming to an end.

From April, the rule change will require merchants to gain cardholder approval at the end of the trial before they start billing.

Merchants will have to send the cardholder – either by email or text – the transaction amount, payment date and merchant name along with explicit instructions on how to cancel the trial to help the customer decide whether or not to proceed with the subscription.

The merchant will have to send a receipt to the cardholder for each transaction by email or text message with clear instructions on how to cancel the service.

In addition, all charges that appear on the cardholder’s statement must now include the merchant website URL or the phone number of the store where the cardholder made the purchase.

More than 16.8 million adult consumers in the UK sign up to subscription services such as gyms, music and video streaming services and delivery services, according to Citizens Advice.

These often begin with an initial free trial, after which customers have ongoing payments taken directly from their bank account.

The advisory service said consumers were wasting an average of £640 a year on unwanted subscriptions.

Mastercard chief franchise officer Paul Petta wrote in a blog: “For some consumers, a free trial is a great way to test out a new product and get comfortable with it before making a purchasing decision.

“And with so many merchants offering them, free trials are becoming the new norm.

“However, sometimes a free trial can unwittingly turn into a recurring subscription that is difficult to cancel.

“These situations can be frustrating and costly for both consumers and their banks.

“The new rules will help in increasing transparency and ensure an outstanding experience for cardholders.”