Your credit card now has you covered if you forget to cancel a subscription service

Jul 7, 2020

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2020 has been the year of streaming and subscriptions. For months, U.S. consumers were at home relying on subscription-based services as their main source of entertainment. With the travel outlook remaining depressed through the rest of the year, streaming and other at-home leisure activities will continue to remain higher than usual.

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There are hundreds of different subscription services, including streaming, that prospective customers can choose from. With many of those services offering free trials or limited-time promotions, it’s easy to sign up — and completely forget. However, you actually could be covered. It just depends on what credit card you’re using.

Related reading: Amex provides limited-time streaming credits, other perks

An era of subscriptions — and the ensuing fatigue

(Photo by Phil Barker/Future Publishing via Getty Images)
(Photo by Phil Barker/Future Publishing via Getty Images)

A recent study from Deloitte highlighted just how prevalent streaming and subscriptions have become — and perhaps how it’s reaching a saturation point for users. Prior to the pandemic, the average U.S. consumer had 12 paid entertainment subscriptions. However, even more telling is that Millennials — who average 17 subscriptions — were said to be “overwhelmed” by the number of subscription services they manage, with 43% intending to reduce them.

That’s not a surprise, since nearly a quarter of subscribers said that “a free or discounted rate” was a significant factor in choosing a paid streaming video service. Subscribe, binge that one series and then cancel.

However, if you happen to forget that last step, the card that you used might have your back.

Related reading: Chase adds limited-time bonuses on streaming, other categories

The credit card policies

The major credit card networks — Visa, Mastercard, and Amex — have policies to protect consumers from unscrupulous subscription tactics. Each network’s policy differs somewhat, but the general takeaway is that you need to be notified or give consent before being billed for recurring transactions. However, there is a huge caveat for Mastercard purchases.

Visa card policy

In April, Visa announced a new policy intended to help consumers better manage recurring payments for free trials. If you sign up for a free trial with a subscription service, the merchant must notify you with an email or text you of the following:

  • Confirmation of the terms of the agreement
  • Proactive announcement of future payments towards the end of the trial period
  • Instructions on how to initiate a cancellation

Visa says that this policy benefits consumers since it “will help to ensure that [they] have greater transparency, choice and control over their subscription payments.”

Related reading: Guide to the best Visa cards

Amex card policy

(Photo courtesy of American Express)
(Photo courtesy of American Express)

Amex has been known for siding with its cardholders when disputes with merchants arise. An Amex spokesperson also told TPG that the company has had “long-standing rules aimed at ensuring merchants provide proper notice to our card members of recurring charges on their cards.”

The issuer asserts that merchants must obtain consent before submitting recurring billing and provide notification that cardholders can, in fact, cancel. Finally, Amex requires that merchant contact details are included and they act to cancel requests immediately. “We work to ensure that the cancellation process for recurring billing is simple and fast for our card members,” the Amex spokesperson stated.

However, unlike Visa, it appears Amex doesn’t require a merchant to remind consumers — either through email or text — about a trial period ending before billing begins.

Related reading: The best Amex cards of 2020

Mastercard policy

In 2019, Mastercard created a policy to protect consumers after free trials ended. The catch? It only applies to physical products, not digital services such as streaming.

“No one wants to be unsatisfied with a physical product after paying for it. 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.”

At a time when digital subscriptions are the norm rather than the exception, this policy seems a bit shortsighted. However, the good news is that for physical products, merchants have to notify you a free trial is ending before billing begins. Like Visa, this must be done over email or text and include merchant contact details.

Related reading: These are the best Mastercard credit cards 

Bottom line

As consumers, we’ve likely all started free trials and wound up subscribing to something we didn’t actually want. These policies help deter merchants from using those types of tactics.

With that said, none of the card networks will know at the time of charge whether the proper notification was made or not. Most likely, it would require a dispute. If there are enough complaints, that could be a violation of the merchant’s contract — and perhaps the card company could go to the extreme step of refusing to accept charges.

It’s best to keep track of your trial subscriptions, but if you’re like most Americans — with a dozen or more services — it’s good to know that most cards will have your back in case you forget.

Featured photo by Jens Kreuter via Unsplash.

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