Effective April 18th, 2020, there are card brand regulation updates to the rules and requirements surrounding free trials that roll into an ongoing subscription.
To ensure compliance with the new requirements and policies, card brands will undertake proactive monitoring and mystery shopping.
The changes apply to all merchants selling physical or digital goods or services offered as subscriptions with a free trial period, which then automatically transitions to an ongoing subscription.
The card brands aim to tackle several issues that typically result from free trials that later convert to paid subscriptions. The rules intend to:
- Improve transparency about what is being offered, increasing customer satisfaction.
- Streamline and simplify cancellation processes, reducing the number of customer service issues.
If merchants are not using the BlueSnap Subscription Billing Engine to sell and manage their subscriptions, they must implement these requirements and meet the rules and regulations on their own.
At the time of enrollment, merchants must require the cardholder to expressly consent to enter an ongoing subscription service for recurring payments.
Our Hosted Checkout Page and Hosted Payment Page solutions now include a mandatory checkbox to support this requirement. Merchants who are not using one of these two hosted solutions must include express consent in their purchase funnel.
At the time of enrollment, merchants must send an electronic copy (such as email or SMS/text) of the terms and conditions of the subscription service to the cardholder, even if no amount was due at the time. The notification must include all the following:
- Confirmation that the cardholder has agreed to a subscription (unless the cardholder cancels)
- The start date of the subscription
- Details of the goods/services
- Ongoing transaction amount and billing frequency/date
- Link or another simple mechanism to enable the cardholder to easily cancel any subsequent transactions online. Merchants must also send an electronic reminder notification (such as email or SMS/text) a link to online cancellation at least seven (7) days before initiating a recurring transaction if:
- A trial period has expired
- The nature of the recurring agreement has changed (such as the price or the billing period).
- A trial period has expired
BlueSnap has added a dedicated email for this purpose. Merchants who are not using the BlueSnap customer email solution must independently implement a notification solution that abides by the specifications of this new policy.
Merchants must disclose the following information on transaction receipts upon the establishment of the agreement:
- Length of any trial period, including clear disclosure that the cardholder will be charged unless the cardholder takes steps to cancel any subsequent transactions.
- Transaction amount and date for the initial transaction (even if no amount is due) and for subsequent recurring transactions.
- A link or other simple mechanism to enable the cardholder to easily cancel any subsequent transactions online.
BlueSnap-issued receipt emails have been updated to abide by this new policy. For these types of subscriptions, a cancellation link is added to our receipt emails. If the shopper clicks the link, the subscription is automatically canceled. Any merchant not using the BlueSnap customer receipt solution must update their receipts to include all the required data and functionality as specified by this new policy.
Merchants must provide an easy way to cancel the subscription or modify the payment method online, regardless of how the cardholder initially interacted with the merchant. For example, the ease of cancellation should be similar to “unsubscribing” from an email distribution list.
Refer to the previous section for the BlueSnap implemented solution.
An additional descriptor indicating a trial period-related transaction will be required in the ‘Merchant Name’ field for the first financial transaction at the end of the trial period. This descriptor (such as "trial" or “free trial”) then appears on cardholder statements. Additionally, the Recurring Payment Indicator must be populated for the first transaction, even if the amount is not equal to the recurring charge.
In the case of a 1-month free trial that started on 15‑Oct with a monthly subscription for $25:
- 15‑Oct: Send a confirmation communication, but no billing.
- Prior to 15‑Nov: We recommend a notification that the $25 charge will occur on 15‑Nov.
- 15‑Nov: Process a $25 charge on the card, with a descriptor that references the free trial (such as "-Trial").
- 15‑Dec (and subsequent charges): Charge the card with the regular descriptor not referring to the free trial.
BlueSnap has added the relevant wording to the end of the descriptor sent on the specified instances. Merchants passing the descriptor through API and/or managing their own subscription charge logic must send BlueSnap the required descriptor value with each first charge after a trial period.
For more information or questions around the new rules regarding your BlueSnap account, contact your Implementation Specialist or Merchant Support.
Updated about 1 month ago