The Visa rule changes are currently scheduled to take effect on April 18, 2020. The changes apply to all merchants who accept Visa cards, whether selling physical goods or digital goods and services, which offer free trials or introductory offers that roll into subscription/recurring agreements. This new policy will also impact those engaged in negative option billing, or the practice of giving customers a service not previously provided, then charging unless buyers explicitly decline the service.

The list of provisions under the new rule are outlined below and come directly from Visa, not Origins Ecommerce:

Provision 1: Express Consent and Enhanced Notification

Digital Receipt & Disclosure: You must give customers a receipt of purchase upon enrollment, even if you’re not yet collecting any payment. You must also provide a copy of all terms and conditions, an outline of ongoing obligations, and a link to cancel service online. The message must include:

• Confirmation that the customer is entering a subscription agreement, unless the customer decides to cancel
• Start date of the subscription
• Details of the goods/services
• The recurring transaction amount, billing frequency, and payment date
• A link or other simple method the customer can use to easily cancel the subscription
• Electronic Notification: You must notify customers before the end of a trial period, and provide a link to cancel online at least seven days before the first transaction at the end of a trial or promotional period. This can be in the form of an email, SMS, or other similar means. The message must include when the trial, introductory offer, or promotional period is coming to an end and information relating to whether the substance of the subscription agreement has changed – such as payment amount or billing period.

Statement Descriptor: Your descriptor in BASE II must clearly identify your initial transaction as a free trial or promotion. For example, “Trial Offer” or similar indicator.

Provision 2: Easier Cancelation

Easier cancellation should (minimally) constitute an online site. It will help, though, to provide multiple options for cancelation, such as email or SMS. For guidance, Visa envisions the process as “akin to ‘unsubscribing’ from email distribution lists.”

Customers must be able to cancel services online, regardless of how they initiated the service. Even if the customer started a trial at a physical outlet or kiosk, they should still be able to cancel online.

Provision 3: Clearer Disputes

Visa will be implementing reason code 13.5 – “Misrepresentation” This code covers merchant fraud identified as false advertising. The new Visa free trial rules expand existing dispute rights outlined under this reason code:

Consumers have the right to file disputes for reason code 13.5 – Misrepresentation if the transaction in question occurred as part of a trial period for which the cardholder was not clearly advised of further billing. If consumers aren’t aware they’re signing up for a service, they can’t be held to it. In response, merchants have the right to fight back by proving evidence of adequate disclosure, cardholder acceptance, and subsequent notification.

Provision 4: Ongoing Monitoring

Visa is planning to implement ongoing merchant monitoring to ensure compliance.

Visa will routinely monitor your recurring indicator and statement descriptor. Visa will also keep an eye out for excessive disputes & fraud, and intervene if they suspect abuse. Lastly, Visa will engage in both mystery shopping and transaction monitoring to watch for:

• Appropriate disclosures
• Notifications
• Cancellation processes

If you have any questions about the impact of these changes on your business, please contact your account manager at Origins Ecommerce.