Consumer protection: Credit card companies should clearly inform consumers when they risk being tricked into costly monthly subscriptions

The European Commission and the network of national consumer authorities (CPC), led by the Danish Consumer Ombudsman, have written to three major credit card companies – Visa, Mastercard and American Express – to request changes to the way information is presented to consumers when they make a payment involving recurring subscription fees. Recent research shows that as many as 1 in 12 EU consumers has ordered a cheap product or service online only to find out later they had been lured into a costly monthly subscription. Common cases involve mobile phones and beauty products sold by online sellers, who are concealing the actual costs in hidden or small print about recurring payments. While credit card companies are not the ones running these schemes, they have a duty to properly inform their customers. In the payment window where consumers enter their credit card information when shopping online, there is often only information about a one-off payment amount, not the recurring subscription. Under EU rules, namely the Payment Services Directive and the Unfair Commercial Practices Directive, consumers must be made aware of the specific amount for payment transactions and they should not be misled. Commissioner for Justice, Didier Reynders, said: “The truth is that sometimes consumers are being tricked and we are calling on credit card companies to ensure that their own customers don’t fall for it. Credit card companies have a duty to uphold EU law and ensure consumers know about the actual costs when buying.”  The three credit card companies now have two months to inform the Commission and CPC authorities about the positive changes they intend to make to their current payment processes. More information is available here.