End of subscription traps as Mastercard plans 'end of free trial' warnings

Katie Morley
Mastercard is planning to launch the free trial end notifications later this year in the UK - Mark Lennihan

A 'subscription trap' which is causing two million Brits to pay for services they don't need could soon be brought to an end under a crackdown by one of the world's biggest payment providers. 

Mastercard, which provides more than 600 million customers with payment cards worldwide,  is launching a new notification service which will warn people signing up for "free" trials when they are coming to an end. 

Over 16.8 million adult consumers in the UK sign up to subscription services like gyms, music and video streaming services and delivery services, according to Citizens Advice. Such services are often offered with an initial "free" trial, after which consumers will have money taken directly from their bank account. 

Around 2 million of these consumers have struggled to cancel the payments, the charity said, with many not realizing their free trials had ended. 

On average consumers are wasting £640 a year on unwanted subscriptions, it said. 

Under Mastercard's new service, which is due to be launched in the UK this summer, businesses will be forced to tell customers when their free trials are coming to an end, as well as sending them a text or email telling them how to cancel and how much they will be charged if they choose to continue.  

In 2017 the Treasury announced plans to crack down on so-called subscription traps, however so far no new rules have been announced. 

Commenting on the move by Mastercard, experts said it was only a matter of time before other payment providers took similar steps to protect consumers from being ripped off each month. 

Gillian Guy, Chief Executive of Citizens Advice, said: “People continue to lose hundreds of pounds every year as a result of being trapped in subscriptions which automatically renew and can be incredibly difficult to cancel.

“More needs to be done to ensure that this practice is stopped across the board so consumers aren’t paying for services they don’t want.

“The government has made it clear they are working to stamp this out, but they need to act now to better protect consumers.”

James Daley, director at campaign group Fairer Finance, said: "Unfortunately, subscription traps are still far too common. There’s nothing wrong with companies tempting customers in with no or low prices for a short period of time - but they need to make it easy to cancel and be very clear with customers about the moment they are about to be charged.

"Mastercard’s initiative to try and keep consumers better informed is a great idea - and will hopefully put an end to unscrupulous firms who look to trick their customers into paying for things they don’t want or need."

A spokesman at Mastercard said: "We want every commerce engagement to be simple, safe and secure and we are introducing rules for merchants that offer free free-trials to make this a hassle-free experience for their consumers. 

"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. 

"For each payment thereafter, 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 if the consumer so desires. 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."