Westpac NZ has helped prevent more than $25 million in unwanted charges to its customers by introducing a payment block on so-called “subscription traps” from online merchants.
“Subscription traps” refers to the practice of overseas-based e-commerce websites selling actual goods or services, but enticing customers to authorise misleading recurring subscription payments on their card.
Since introducing the payment block in April 2024, Westpac has helped thousands of customers avoid potentially unexpected costs, with more than 20,000 customers protected in the last three months alone.
Westpac NZ Head of Customer Care Operations, Peter Barnes says the block only applies to businesses who mislead customers and then make it extremely difficult to cancel recurring payments.
“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.
The bank views such money-making model as unethical and have taken the decision to block them.
“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,” Barnes added.
According to the Westpac Bank, at times contacting the merchant to dispute or cancel such subscriptions is often difficult or near impossible.
“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.”
Westpac is working with other banks to help them protect their customers from subscription traps, and is looking forward to greater collaboration across business and government.
“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,” Barnes says.
Westpac tip to spot ‘subscription traps’ is before you hit purchase, see if price advertised on social media – as compared to other websites, is too good to be true and if merchant offers a members-only discounted price.
