Mastercard recently announced new requirements for merchants using a subscription billing model or negative option model, or both. The new standards focus on disclosures made to consumers at the point of payment; providing adequate confirmation, notices, and billing receipts; and affording customers an online or electronic cancellation method. Requirements relating to point of payment disclosures become effective on September 22, 2022. The other requirements will become effective much sooner, on March 22, 2022. As always, reconciling card brand requirements with current federal and state legal requirements and law enforcement priorities will take particular care and attention, particularly as laws in California and other states continue to evolve.
The Mastercard updates, like those imposed by other card brands, are intended to reduce complaints and chargebacks from consumers who might not understand they were enrolled in an automatic renewal subscription or negative option program (or who do not understand the billing terms), forgot they enrolled, or have difficulty canceling their subscriptions.
As we summarize below, the new Mastercard requirements apply to merchants using subscription/recurring billing models, including programs that charge a consumer for goods or services on a prearranged schedule (such as streaming video services, membership clubs, and software licenses). Mastercard included certain additional requirements for negative option programs, where the merchant offers an initial free or discounted trial period of a subscription before automatically enrolling the consumer into the subscription, and the consumer must take some action to cancel before the end of the trial to avoid continuing with the subscription. Continue Reading New Mastercard Requirements for Subscription and Negative Option Billing Models