New Zealanders are losing millions of dollars a year to “subscription traps”, one bank says.
Westpac said it had helped to stop more than $25m in unwanted charges being processed on to the cards of unwitting customers.
Westpac NZ head of customer care operations Peter Barnes said many overseas-based websites were selling goods and services that hooked customers into recurring subscription payments.
The bank implemented a block in April 2024 and had stopped 20,000 customers from making these sorts of payments within the past three months.
Barnes said the block was implemented after a spike in customer complaints and feedback on overseas subscriptions. Many were businesses based in Europe and the UK, he said.
Barnes said it would only apply to businesses who misled customers and then made it extremely difficult to cancel recurring payments.
Fine print
“These types of businesses aren’t necessarily acting fraudulently, because they do disclose the subscription details in their fine print, but typically they don’t offer this information up front,” Barnes said.
“It’s not normally until the following month or two when [the customer] sees the recurring fee from a credit card account that they actually twig that something’s not quite right.”
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He said it was an unethical way of making money but was seen in everything from gift boxes, shoes, clothing and accessories to sportswear and digital content.
“This is not just a case of someone signing up for a free trial and forgetting to cancel before the subscription kicks in. Typically, once someone has made a purchase through a merchant like this, they only realise they have signed up to a subscription when they see further charges on their credit card.
“When they contact the merchant to dispute the transaction, it can often be difficult and time-consuming to cancel the subscription, and sometimes the merchant may be completely uncontactable. Customers may eventually resort to cancelling their credit card to stop the payments, which can be disruptive and inconvenient.
“Blocking these types of payments is another way we can help protect customers, on top of initiatives like rolling out a confirmation of payee service and enhancing our fraud monitoring systems with biometric technology.”
He said a block would also stop customers’ details being made available to unscrupulous third parties online.
Westpac was working with other banks on the problem.
“While this payment block has been working well so far, we encourage New Zealanders to be careful when transacting online, including reading the fine print when making purchases.
“If something doesn’t look or feel right, take a step back and check whether the payment you’re making is legitimate.”
rnz.co.nz
