Additional Consumer Protection Strategy Is Launched by Visa
In what may be a controversial move, Visa announced it is clamping down on a retail policy it said sometimes hurts consumers.
Using the policy, known as "data pass," a known online retailer offers the consumer an opportunity to buy additional products and services while on the retailer's site. However, Visa said, the consumer often does not realize these other products and services are from another party and may carry additional monthly charges or fees.
"Such deceptive marketing can result in high levels of consumer disputes and degrades the efficiency, reliability and security of the payment system," the card brand said when making the announcement, adding that a 2009 U.S. Senate Commerce Committee staff report found that 35 million consumers have paid $1.4 billion for data pass marketing offers.
"Visa's priority is protecting our cardholders and the integrity of the electronic payments system," said Martin Elliot, a payment system risk executive for Visa. "Consumers who shop online using their Visa cards should be confident that they will only be charged for the products and services they legitimately intend to purchase-not those that are foisted on them through deceptive data pass schemes."
Henceforth, customers will have to reenter their payment information if they are purchasing something from one retailer on another retailer's site, Visa said. "This provides a clear signal to cardholders that a second purchase is being initiated and protects them from questionable marketing practices."
"I applaud Visa's decision to prohibit merchants from using 'data pass' marketing on its network," said Sen. John D. Rockefeller IV, chairman of the U.S. Senate Committee on Commerce, Science and Transportation.
"The Senate Commerce Committee's investigation showed that this aggressive marketing practice enabled unscrupulous e-commerce companies to scam millions of American consumers out of more than a billion dollars. Our committee's investigation revealed how appalling this practice is and makes clear it should not be allowed-I'm glad to see Visa has reached the same conclusion."
The announcement follows a program Visa launched in December with the U.S. Federal Trade Commission and Better Business Bureau to educate consumers on deceptive marketing practices. Visa continues to aggressively enforce risk programs to identify and address merchants who use bogus marketing tactics to dupe consumers.
"Protecting cardholders is among Visa's highest priorities, and we want to ensure every business in the payments system has the same commitment to ensuring consumer confidence," Elliott said.