Westpac says New Zealanders lose millions of dollars annually to so-called “subscription traps.”
The bank reports having prevented over $25 million in unwanted charges from being applied to customers’ cards without their knowledge.
According to Peter Barnes, Head of Customer Care Operations at Westpac New Zealand, numerous overseas websites are offering products and services that automatically enrol customers in ongoing subscription payments.
Barnes said the bank introduced a payment block in April 2024, following a surge in customer complaints about overseas subscriptions. He noted that many of these businesses were based in Europe and the United Kingdom.
The payment block was able to stop 20,000 customers from completing such types of transactions over the past three months.
Barnes noted that the block would only target businesses that deceived customers and then made it exceptionally challenging to cancel ongoing 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,” he said.
“It’s not normally until the following month or two when the customer sees the recurring fee from a credit card account that they actually twig that something’s not quite right.”
Barnes explained that this approach, which he described as making money unethically, is found across a wide range of products, including gift boxes, footwear, clothing, accessories, sportswear, and digital content.
“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.”
While Westpac’s payment block has proven effective so far, Barnes urged New Zealanders to remain vigilant when shopping online and to carefully review the fine print before making purchases.
“If something doesn’t look or feel right, take a step back and check whether the payment you’re making is legitimate.”