Visa Takes Steps to Prevent Aggressive Internet Sales Tactics

Visa DebitHave you ever bought something online, completed the shopping cart submission, and then been offered a new “opportunity” to buy something from another merchant? The tactic is called “data pass” marketing, and is used by some merchants deceptively. Visa, Inc. (NYSE: V) today announced rules effectively preventing this practice.

Visa, Inc. (NYSE: V) has been active in issuing rules and operating regulations to make the Internet safer for consumers. Several months ago, Visa cracked down on over 100 Internet retailers who used aggressive continuity or rebill practices. Today, Visa announced that it is
prohibiting Internet retailers from providing cardholder information to other companies without the consumer’s knowledge or active consent.

The tactic is referred to as “data pass” marketing. Here’s how it works.

Consumers completing a purchase transaction online do not have to enter their billing information again to be enrolled in a membership club offered by a third party. Internet consumers can usually accept the third party post-transaction membership club offer without having to type in their credit or debit card numbers again. As a result of so-called “data pass” or “card on file” arrangements between retailers and the third party companies, online consumers’ credit card or debit card account numbers can be automatically transferred from the websites where the consumers are shopping to the third party companies.

Several of the more aggressive “data pass” merchants and billers “voluntarily” stopped their data pass practices earlier this year after the U.S. Senate Committee on Commerce, Science, and Transportation conducted an investigation into their aggressive tactics. However, the move by Visa will make sure that other merchants and billers do not use the techniques.

The data pass techniques are similar to another technique referred to as “post transaction marketing” in which a third party offer is presented as online consumers are completing their purchases on familiar retailers’ websites. After consumers have completed inputting their billing information into a check out or purchase page on a familiar retailers Web site, but before they have completed confirmation of the transaction, unfamiliar third party companies will attempt to enroll consumers in membership clubs offering discounts or other services. Due to the positioning of these offers in the purchase process, they are commonly referred to as “post-transaction offers”.

Visa’s rules already prohibit merchants from sharing a cardholder’s account number and other Visa transaction information with any entity that is not directly involved in completing the transaction, preventing fraud, or as required by law. To address the data pass practice, merchants will now have to prompt consumers to re-enter their card information to accept a subsequent offer from a third-party merchant. This provides a clear signal to cardholders that a second purchase is being initiated and protects them from questionable marketing practices.

The Visa press release is here. The new restrictions will make it easier (and safer) to shop online without any nasty billing surprises.

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