Westpac NZ Clampdown on Subscription Traps Saves Millions
Westpac NZ has helped prevent more than $25m 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,” Mr Barnes says.
“As a result, we view their 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.
“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.”
Mr Barnes says 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.
“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.
“And if you think you may be caught up in a fraud or scam, call your bank immediately. The sooner we know, the better our chances of recovering your money.”
Top tips for spotting “subscription traps” before you hit purchase:
https://www.westpac.co.nz/about-us/media/westpac-nzs-crackdown-on-subscription-traps-saves-customers-millions/