Recently, there has been a welcome bump in sales due to more people staying at home, but selling memberships to adult entertainment websites has never been harder than it is today. The affiliate model doesn’t drive the sales it once did, piracy makes your new exclusive content available minutes after it goes live and surfers are jerking off to mountains of free porn on tube sites instead of paying for access.
Discounted and free trial memberships can be an effective way to bring in new members, with the expectation a significant portion will rebill at regular rates, so long as you keep providing fresh content to keep the members happy. Conversely, mediocre content and reminders of the cost will drive them away.
The latest updates require trial membership sellers to get express consent from buyers at the time of purchase.
Visa now wants to make sure those customers know what they are signing up for and make it easy for them to cancel before their trial membership rebills, by updating consent and notification requirements. If you are using free or reduced cost trials to sell memberships, the new requirements could mean lower conversion rates and more cancellations. Visa’s dominance in the payment world and few alternatives for adult companies mean compliance with their rules, even more than government law, is mandatory to stay alive online.
Visa can afford to be heavy-handed. They are a $375 billion dollar company, and even though we in the adult industry think we make them a lot of money, the amount Visa earns from processing online adult entertainment is not much more than a rounding error in their world. Their cardholders are much more important to them than adult merchants and the new rules for trial memberships show that bias. The backlash from card-banging in the past and other unscrupulous practices contributed to the rules that now make it harder for forthright producers to make sales.
The latest updates require trial membership sellers to get express consent from buyers at the time of purchase and provide them with explicit transaction receipts, notifications and a link or easy method to cancel online … before renewing to full membership. At the time of writing, Visa plans to make these new requirements mandatory in July.
First, Visa will require you to obtain “express consent” from the new member to enter into a recurring subscription. This means the customer needs to be aware of exactly what it is he is signing up for — an ongoing subscription service for recurring payments after the trial ends. Consult with your payment processor or legal advisor to review your join forms and make sure you meet this requirement.
Next, Visa is going to require “enhanced notification.” In order to comply with this requirement, the merchant (or third-party biller) must provide a copy of the terms and conditions of the subscription, even if the trial is free. Email is the suggested method for notification, and it must include notice the cardholder has agreed to this subscription, the start date of the subscription, details of the product, the ongoing transaction amount, the billing frequency (and date of recurring billing) and a link or other simple mechanism for the cardholder to cancel. Lastly, the merchant must send a reminder notification at least 7 days before initiating a recurring transaction or if the price or billing period changes, such as going from 7 days to monthly.
What this means is you need to send the new member an email notifying them their trial is going to expire and give them an easy opportunity to cancel before rebilling. The good news is, that if you are selling short trials, you can send this email at the time of the join. The bad news is, Visa is forcing you to make it easy for these new members to cancel, so get out your calculators and review your traffic stats and conversion rates. It will be more important than ever to have good traffic and content that keeps them rebilling, especially if you are paying affiliates through pay-per-signup programs.
Visa will also require “explicit transaction receipts” at the time of purchase. This doesn’t mean sending receipts with a background that shows pornographic imagery, this means sending a receipt that shows the length of the trial or promotional period, including a clear disclosure the card holder will be charged unless the cardholder cancels, date of the initial transaction and transaction amount (even if it is free) and description of subsequent recurring transactions, as well as a link or other simple mechanism to easily cancel.
When the customer clicks that final purchase button, your system needs to send that customer a receipt showing the amount charged today, the amount that will be charged and the date it will be charged if the customer does not cancel, and a link to easily cancel. You must also enable an additional descriptor that will appear on the cardholders’ statements, such as “trial” or “trial period” so the customer can more easily identify the transaction.
Finally, Visa is expanding the customers’ rights to dispute transactions, particularly for digital goods that have been purchased as part of a trial. Visa has specifically spelled out that the dispute condition of “misrepresentation” will be expanded, so adult merchants need to be ready to show the cardholder expressly agreed to the transaction and the merchant complied with the new, enhanced requirements.
If you have a good product, straightforward join sequences that inform the customer what he is buying and provide quality updates, you can continue to make good money. If you are using a good third-party billing, most likely the new regulations will be met without any sweat on your part. The new requirements were intended to take effect in April but were pushed back to July. In the meantime, get in touch with your payment processor and legal advisor to make sure your program is up to date.
Chad Anderson is an attorney practicing in business relations, privacy and data security and is the founder of DPO Solutions Ltd, which provides data privacy policy consulting. He earned his Juris Doctor at the University of North Dakota and Master’s degree in Cybersecurity Law at the University of Maryland School of Law. Chad sits on the Arizona State Bar Ethics Advisory Group and is a member of the Cybersecurity section of the American Bar Association, the Information Systems Audit and Control Association, the International Association of Privacy Professionals and Mensa International. None of what has been written here should be taken as legal advice. Email chad@dposolutions.com to get in touch.
