Mastercard Free Trial Requirements

March 6, 2019 

Mastercard Free Trial Rules

Last month, Mastercard Incorporated (“Mastercard”) announced an important change to its policies that will require merchants to provide specific automatic enrollment disclosures to consumers at the conclusion of all free-trial offers. The Mastercard free trial terms are intended to protect consumers from merchants that offer misleading “free to pay” conversions, continuity plans, and negative option plans. Mastercard’s free trial rules go into effect April 2019.

What is the significance of Mastercard’s free trial terms? 

Disclosing Recurring Billing Methods 

In the past few years, a number of states have implemented (or revised) laws which restrict merchants from offering “free” trials that convert into automatic monthly billing programs without providing sufficient notice to (and obtaining consent from) the consumer. As we have previously blogged, states such as California (requiring customer consent before automatic renewals may commence), Vermont (requiring a double opt-in: one for the trial offer and one for the continuity program), as well as the District of Columbia, have enacted laws that require greater notice of material terms and consumer protections before merchants may charge for continuity and negative option plans. In addition, the Federal Trade Commission is actively involved in prosecuting merchants (under the Restore Online Shopper’s Confidence Act and Section 5 of the FTC Act) who offer free trials and continuity plans without providing conspicuous disclosures notifying consumers that they are enrolling in an automatic renewal plan, the price per month, and the amount of time that the consumer has to cancel.

Mastercard’s free trial terms affect merchants who offer free trials and collect card information for future automatic billing only for physical goods (not services). In particular, Mastercard’s free trial terms require merchants to obtain cardholder approval at the conclusion of the free trial period via email or text message before they may commence billing. This will allow consumers to confirm their subscriptions and authorize automatic billing once the free trial term ends.

In addition, Mastercard will require merchants to provide the following information to consumers at the time of enrollment: (i) transaction amount; (ii) payment date; (iii) merchant name; and (iv) explicit instructions on how to cancel. If the consumer decides not to cancel, the merchant is required to send a receipt following each subsequent transaction containing the merchant website URL or phone number, along with clear instructions on how to cancel.

Complying with the Mastercard Free Trial Terms

Mastercard’s free trial terms are notable in the sense that merchant non-compliance would not be a violation of the law. However, transgressions are not insignificant, as merchants may lose their Mastercard processing rights if the free trial terms are violated. Such an eventuality results in serious economic effects for most businesses.

When properly administered, recurring billing methods provide a convenience for both businesses and their customers by doing away with the need to revisit the purchase/payment process each month for a product or service that the consumer plans to use for an extended period of time. However, as detailed hereinabove, it is crucial that all material program terms are disclosed and that the consumers expressly agree to these renewal terms in advance. Where compliant with applicable law and credit card guidelines, these billing methods can provide value to both sides of the transaction.

If you are interested in learning more about this topic, have been served with process concerning your marketing practices, or if you are facing an investigation from the FTC or other regulatory agency, please e-mail us at, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.  

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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