Visa is cracking down on forced continuity

by adamv
10 replies
I just saw a link to the following article on Yahoo's homepage.

Visa cuts off 100 merchants for scamming consumers - Yahoo! Finance

Visa is cutting off 100 merchants that used forced continuity billing on CPA offers.
#continuity #cracking #forced #visa
  • Profile picture of the author ExRat
    Hi adamv,

    To be precise, it's actually hidden forced continuity that they're cracking down on.

    They think they're entering a credit card number to pay for shipping and handling. But in a few clicks, they've unwittingly authorized ongoing charges that can rack up fast. When consumers see their statements and try to question the charges, they are often unable to track anyone down to make them stop. Often, clicking through can result in more than one monthly charge on a card.

    "The game here is to get people hooked, keep them on the hook for monthly charges as long as you can, and only stop making those charges when you're forced to," said Stephen Salter, vice president of BBB Online.

    [snip]

    The trick is a marketing technique called "negative option," where customers must say they don't want to join a so-called club or receive additional materials in the future. The details of the ongoing charges are often in small print or can only be found by following a hyperlink.

    [snip]

    Negative option marketing is not illegal. It's the hidden manner some companies use to get people to agree to the charges that is the problem. "Those cost disclosures have to be upfront and prominent," Greisman said.
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    • Profile picture of the author adamv
      Originally Posted by ExRat View Post

      Hi adamv,

      To be precise, it's actually hidden forced continuity that they're cracking down on.
      Yes, you're absolutely right.
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      • Profile picture of the author kindsvater
        This is good news. Definitely could impact a few Internet Marketers - especially since work at home programs are mentioned in the article.

        Some make it virtually impossible to cancel the monthly billing of their products.

        This is an area where I absolutely love PayPal - because as the buyer I have the power to simply click and cancel a monthly membership.
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  • Profile picture of the author Heuristic
    I wonder what took them so long? This is long overdue in my opinion. Maybe Visa is doing them a favor before the FTC steps in and takes everything they own.

    Of course there are other charge cards. In any case, it should be a wake-up call for those who make their living off hidden forced continuity.
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    • Profile picture of the author Dennis Gaskill
      Originally Posted by Heuristic View Post

      I wonder what took them so long? This is long overdue in my opinion. Maybe Visa is doing them a favor before the FTC steps in and takes everything they own.

      Of course there are other charge cards. In any case, it should be a wake-up call for those who make their living off hidden forced continuity.
      My thoughts exactly. I'd like to see them ordered to refund the money they essentially stole or face prison time.
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  • Profile picture of the author MarkAse
    Scared me for a second as my wine club is going to running on a subscription payment. It's a good thing for the industry though, we all lose credibility when someone feels scammed out of an extra months payment.

    Paypal, which I don't peculiarly care of, does do a good job at making it clear when your subscription payment is going to be made.
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  • Profile picture of the author seasoned
    Yeah, business ethics/law has LONG held, and LONG before I was born, and probably before the US even existed, that payments should be DIRECT or tied to a CONTRACT, and CONTRACTS have to clearly spell out the terms.

    Too many companies tried to skirt by the rules, etc... and everyone is starting to crack down. A few years ago, clickbank and a number of payment conduits started demanding more disclosure. I think Paypal ALWAYS provided it on products they had, within two pages it shows the prices and term durations, besides the customer paypal pro and THERE they state that people should disclose the prices.

    There used to be the "claim" that "If you have to ask, you can't afford it". Well, about 20 years ago I tried to get the price of a lower level Rolex watch. CERTAINLY not BOTTOM of the line, but nowhere near the top either! It cost about $14,000 USD! A friend told me about "coach". YIKES, their bags are EXPENSIVE! And to hear about some men's suits, and women's dresses, YIKES! I bet whoever said "If you have to ask, you can't afford it" was a charlatan or a pauper!

    HECK, just TODAY some JERK told me I could get some stuff for FREE! I went to the site, and it is a forced continuity deal. The FTC has long said that free means FREE!!!!!! If the FTC were more diligent, and had enough people, those people would really be in trouble.

    Steve
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    • Profile picture of the author JimLillig
      I agree totally with kindsvater's comments. This is a damn good thing. Particularly if you are in Biz Opp. I have been saying for a long time the home business community of advertisers needs to get off the gimmicks and onto actually making people money.

      But it is a double edged sword in Biz Opp, because so many people start off with good intentions only to not even get started, or try it for a week or so and give up. It is a lot like weight loss. Maybe the psychology is the same.

      Regardless, hidden continuity is a holdover from the days when adult sites used to charge up to 4 separate recurring charges when someone signed up to an adult site. It was wrong then, and it is wrong now.

      Transparency in the transaction creates better buyers for advertisers anyway. So truly well intentioned and deep content advertisers in the biz opp space will always have an affiliate following, whereas the "converts like there's no tomorrow because there is no tomorrow" campaigns tend to have short lifespans.

      I feel advertisers succumb to the temptation because they see the difference in the conversions that transparency makes (the additional disclosure can affect sales conversion, up to 50% in some cases), and feel they can convert those whom they "trick" into signing up into being upsold again and again. Even if they reversed the charges or got a refund. Or at the very least they can sell their data to several sources and recoup some of their acquisition costs or put them on their mailing list forever. Greed.

      Do the math, transparency makes sense:
      Advertiser A sells 1000 memberships in a month, but keeps them active in their continuity program for only for an average 2.2 months. Let's say they can make their initial money back by 1.5 months, that gives them a decent margin that is supported by the volume.

      On the other hand, Advertiser B sells 500 memberships a month but keeps them an average of 4.5 months, but he had to pay a higher acquisition cost to offset the decrease in conversions which increased his time to payback to 2.0 months.

      Advertiser A: 2.2 months (avg. membership length) - 1.5 months (acquisition cost expressed as months) = 0.7 months revenue per member x 1000 (sales per month) = 700 (monthly revenue expressed in subscriptions)

      Advertiser B: 4.5 months (avg. membership length) - 2 months (acquisition cost expressed as months) = 2.5 months revenue per member x 500 (sales per month) = 1250 (monthly revenue expressed in subscriptions)

      A 71% increase in revenue from subscriptions.

      Advertiser B is getting over 3X the lifetime customer value from the customer than Advertiser A and more than likely they are more open to an upsell. True Advertiser B did assume more risk, but their payoff seems more than worth it.

      Higher quality sales means less customer service costs, as well as not having to worry if your transaction processor is going to drop you.

      From the Publisher side of things though, this means that you will have to work harder to partner with campaigns that truly add value and deliver the goods. In Biz Opp, if you make the end user any money at all, you will keep 80% of the buyers month to month. Those campaigns will be the long term campaigns that publishers with the best traffic should have the best success in the long term.

      Besides, short term Biz Opps have a way of blowing up on a network, and sometimes end up not paying the network at all (if they get shut down by Visa). If that happens sometimes (not always) the Publisher doesn't get paid. Long term campaigns, with no hidden continuity tend to be much better at paying their bills on time.

      As I said up top, this is a good thing.
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  • Profile picture of the author thunderbird
    After having been deceived and lied to myself by droolingly worshiped IM names in such a manner, I can't say I'd lose any tears over Visa's new policies. That said, as crime, deception and parasitic looting goes, I'd rather see the law cracking down on the most pernicious organized crime that affect you in scary largely unseen ways, ie banks, creditors, and "insurance" companies. Visa itself is a bigger criminal entity than those big-name small-time IM shysters.
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  • Profile picture of the author seasoned
    As for there being other cards? In the US, only 4 are widely used.

    VISA and MASTERCARD(I used to think these were the same company, since they try to mirron one another)

    AMERICAN EXPRESS(Tends to be strict)

    DISCOVER(Will probably ALSO follow suit)

    We probably only have about 2 others that have really been viable in recent memory, but they are rarely even mentioned anymore. I used to have one of them and it turns out that THEY bought out the other WHO, in 2008, were bought by DISCOVER! In fact, the 5th most popular in the US may be JCB, and THEY are japanese!

    Steve
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