Subscription disputes usually come from surprise, not fraud. When a customer completes a "free trial" or "$1 trial offer" without understanding they'll be charged $79.99 monthly afterward, the resulting chargeback creates risk for payment processors, acquirers, and risk teams. The problem is not the continuity billing model (which is legitimate) but the disclosure, consent, and cancellation practices that determine whether a merchant operates responsibly or accumulates dispute risk.
This guide provides the complete assessment framework we use to evaluate trial offer merchants and distinguish low-risk subscription operators from high-risk practices that generate chargebacks, regulatory complaints, and reputational damage.
The Challenge
When a merchant approaches an acquirer offering "free trials", "$1 trials", or "try before you buy" continuity billing, the complexity is not in understanding the billing model but in evaluating whether customers genuinely understand what they are signing up for. Unlike one-time purchases, subscription models require ongoing consent verification: did the customer know this was recurring, did they understand the full price after the trial, and can they cancel easily if they change their mind.
Trial-based subscription models span industries (supplements, software, streaming services, beauty products, fitness programs, meal kits), but they share common risk factors. Payment processors and compliance teams must distinguish between merchants who use trials as a legitimate customer acquisition strategy with clear disclosures and those who rely on consumer confusion to maximize conversions at the expense of dispute rates.
The regulatory environment has evolved significantly. The Federal Trade Commission (FTC) Negative Option Rule, effective April 2024, imposes specific requirements on subscription merchants including clear disclosure, affirmative consent, simple cancellation mechanisms, and timely reminders. Card network dispute monitoring programs penalize merchants with excessive chargeback ratios. These pressures make it critical to assess trial subscription controls before onboarding and monitor them continuously afterward.
Understanding the Business Model Distinction
Trial-based subscription models vary in risk profile:
Low-risk trial subscriptions: Merchants that provide clear, prominent disclosures at the point of purchase, obtain affirmative consent for recurring charges, offer simple cancellation methods, send pre-charge reminders, and maintain low dispute rates (acceptable risk with proper controls)
High-risk trial subscriptions: Merchants that bury disclosures in fine print, rely on consumer confusion or inattention, make cancellation difficult, skip reminder communications, and generate high dispute rates (high risk, typically unacceptable for most processors)
The business model itself (offering a trial period before full-price billing begins) is not inherently high-risk. The risk emerges from how disclosures are presented, how consent is captured, and how easy it is for customers to cancel. Merchants who design their checkout flow to maximize confusion or friction are building a chargeback liability, regardless of what they sell.
The Complete Assessment Framework
Disclosure Clarity and Prominence
Why it matters: Disclosure is the foundation of informed consent. If customers do not understand the full terms of the offer at the decision point, they cannot provide meaningful consent to recurring billing.
Disclosures must be clear (unambiguous language), conspicuous (visually prominent at the point of purchase), and proximate (directly adjacent to the purchase button or consent checkbox). Hidden disclosures, vague language, or terms buried in separate pages fail this standard.
High-Risk Disclosure Patterns
Buried or obscured disclosures:
- Subscription terms appear only in footer links, separate Terms of Service pages, or FAQ sections
- Trial duration and full price are not displayed on the checkout page
- Disclosures use small font sizes (below 10pt), low-contrast colors (light gray on white), or hidden scrollable containers
- Critical information requires clicking "See more" or expanding accordion sections
Why this is high risk: If customers must actively search for subscription terms, most will not see them. Conversion optimization that hides material terms creates dispute risk.
Vague or ambiguous language:
- "Special offer" or "limited time pricing" without stating the recurring nature
- "Only pay shipping" without disclosing the trial subscription being initiated
- "Try risk-free" without explaining billing after the trial period
- Using terms like "membership" or "VIP access" instead of clearly stating "subscription"
Why this is high risk: Ambiguous language allows customers to misinterpret the offer. Clear words matter: "You will be charged $79.99 per month starting 14 days from today" is unambiguous. "Special introductory offer" is not.
Separated or non-proximate disclosures:
- Subscription terms disclosed on a previous page in the checkout flow
- Critical information in email confirmation only (not at point of purchase)
- Trial terms on product page but not repeated at checkout
- Reliance on "you agreed to our Terms of Service" without inline disclosure
Why this is high risk: Customers make the purchase decision at checkout. Disclosures that appear earlier in the funnel or only afterward are not effective.
Acceptable Disclosure Patterns
Clear inline disclosures:
- Subscription terms displayed directly on the checkout page
- Trial duration, full price, and billing frequency stated explicitly
- Disclosures appear immediately above or adjacent to the purchase button
- No need to click, scroll, or navigate to see critical terms
Unambiguous language:
- "14-day trial, then $79.99/month automatically"
- "You will be charged $1 today, then $59.99 on [specific date], and monthly thereafter"
- "Subscription automatically renews unless you cancel before [date]"
- Using words like "subscription", "recurring", "automatic billing", "monthly charge"
Prominent visual presentation:
- Font size equivalent to or larger than surrounding text (minimum 10pt)
- High-contrast colors (black text on white background, or equivalent)
- Boxed, highlighted, or visually distinct formatting
- Positioned in primary visual hierarchy (not footer or sidebar)
Affirmative consent capture:
- Checkbox or button specifically acknowledging subscription terms (not pre-checked)
- Language like "I understand I will be charged $XX on [date] and monthly thereafter"
- Separate action required to consent to subscription (not bundled with general terms acceptance)
What to Request from Merchant
Category
Documentation Needed
Checkout flow screenshots
- Complete checkout process from product page to confirmation
- Mobile and desktop versions
- All variations used in different campaigns or traffic sources
- Examples from actual live site (not mockups)
Disclosure text review
- Exact wording of trial terms and subscription disclosures
- Font sizes and color codes used
- Positioning relative to purchase button (measurements or screenshots)
- Any disclaimers or additional terms
Consent mechanisms
- Checkbox or button language for subscription consent
- Whether consent is pre-checked or requires affirmative action
- Integration of consent into checkout flow
- Confirmation page or email showing terms recap
A/B testing documentation
- Variations being tested on checkout flows
- Different disclosure approaches being used
- Performance metrics (conversion rate vs. dispute rate) for different versions
Testing Protocol
- Live checkout test: Complete a test purchase using a real payment method. Verify:
- Are subscription terms visible and clear at checkout without scrolling or clicking?
- Is the trial duration stated explicitly (e.g., "14 days", not "limited time")?
- Is the full price after trial stated clearly?
- Is the billing frequency obvious (monthly, annually)?
- Is there an affirmative consent checkbox or acknowledgment?
- Mobile verification: Repeat checkout test on mobile device (where disclosures are sometimes smaller or hidden)
- Screenshot comparison: Compare merchant-provided screenshots to live site. Verify consistency and check for undisclosed variations.
- Source code review: Examine HTML/CSS for disclosure elements:
- Font sizes (anything below 10pt is a red flag)
- Color contrast ratios (WCAG AA standard minimum)
- Element positioning and z-index (overlays or hidden elements)
Merchant assessment
- Subscription terms are displayed inline on the checkout page
- Trial duration and full price after trial are stated explicitly and unambiguously
- Disclosures use clear language: “subscription”, “recurring”, “monthly charge”, specific dollar amounts and dates
- Font size is readable (minimum 10pt) with high contrast
- Disclosures are positioned adjacent to purchase button (not footer, separate page, or requiring clicks)
- Affirmative consent is captured via non-pre-checked checkbox or explicit acknowledgment
- Mobile checkout displays the same clear disclosures (not hidden or truncated)
- Confirmation page or email recaps subscription terms
Red flag threshold:
- Disclosures only in footer, ToS, or separate pages = CRITICAL RISK (auto-decline)
- Vague language ("special offer", "VIP access") without stating "subscription" and full terms = HIGH RISK
- Disclosures in small font (<10pt) or low-contrast colors = HIGH RISK
- Disclosures separated from purchase button or on previous pages only = HIGH RISK
- Pre-checked consent boxes = MEDIUM RISK (FTC violation risk)
Consent Capture and Documentation
Why it matters: Clear disclosure is necessary but not sufficient. Merchants must be able to prove that each customer affirmatively consented to the subscription terms at the time of purchase.
Consent documentation protects both the merchant and the payment processor during disputes. When customers claim they did not know about recurring charges, the evidence of what was displayed and what they acknowledged determines dispute outcomes.
High-Risk Consent Patterns
Passive or assumed consent:
- No explicit acknowledgment of subscription terms required
- Subscription consent bundled into general "I agree to Terms of Service" checkbox
- Pre-checked boxes for subscription enrollment
- Consent implied by completing purchase (no separate action required)
Why this is high risk: Passive consent does not demonstrate customer understanding. The FTC Negative Option Rule requires affirmative consent, meaning customers must take a clear, deliberate action to agree to recurring charges.
Inadequate consent documentation:
- No record of what disclosures were shown to each customer at time of purchase
- Inability to produce customer-specific consent evidence during disputes
- Generic terms and conditions without checkout-specific capture
- No timestamp or versioning of terms customer agreed to
Why this is high risk: Without proof of what the customer saw and agreed to, dispute defense fails. Card networks and regulators require evidence, not assertions.
Inconsistent consent capture:
- Different disclosure and consent flows for different traffic sources
- A/B tests that remove or weaken consent mechanisms
- Consent requirements vary by product, campaign, or customer segment
- Mobile checkout has weaker consent than desktop
Why this is high risk: Inconsistency suggests the merchant knows strong consent reduces conversions and selectively weakens it. This indicates intentional design to obscure terms.
Acceptable Consent Patterns
Affirmative consent required:
- Separate checkbox or button specifically for subscription terms (not pre-checked)
- Language explicitly acknowledging trial duration, full price, billing frequency
- Example: "I agree to be charged $1 today for a 14-day trial, then $79.99 per month until I cancel"
- Cannot complete purchase without checking the box or clicking acknowledgment
Comprehensive consent documentation:
- System logs what disclosures were displayed to each customer
- Records timestamp of consent, IP address, user agent
- Stores version of terms customer agreed to
- Captures customer-specific consent evidence (can be retrieved during disputes)
- Screenshots or HTML snapshots of checkout page as displayed to customer
Consistent consent across all channels:
- Same disclosure and consent standards on desktop, mobile, tablet
- Consistent requirements across all products, campaigns, traffic sources
- A/B testing does not weaken consent mechanisms (may test wording but not presence)
- All variations meet minimum disclosure and consent standards
What to Request from Merchant
Category
Documentation Needed
Consent mechanism
- Exact language of consent checkbox or acknowledgment button
- Whether consent is pre-checked or requires affirmative action
- System logic preventing purchase without consent
- Examples of consent capture from different platforms (web, mobile, app)
Consent logging
- Description of data captured at time of consent
- Sample consent record (redacted for privacy)
- Ability to retrieve consent evidence by customer or transaction
- Retention period for consent records
Dispute response process
- How merchant responds to subscription disputes
- Evidence provided to card networks during representment
- Sample dispute response packages
- Win rate on disputed transactions
Compliance with FTC Negative Option Rule
- Written policy documenting compliance with affirmative consent requirements
- Training materials for staff on consent capture
- Audit results or compliance assessments
Testing Protocol
- Consent verification: Complete test purchase and verify:
- Was a separate action required to consent to subscription terms?
- Was the checkbox pre-checked or unchecked by default?
- Could purchase be completed without checking the box?
- Did confirmation email or page recap the consent given?
- Evidence retrieval: Request merchant to produce consent evidence for your test transaction:
- What disclosures were shown?
- What consent was captured?
- Timestamp and metadata
- Can merchant retrieve this on demand for any transaction?
- Cross-channel consistency: Test consent capture on:
- Desktop web browser
- Mobile web browser
- Mobile app (if applicable)
- Different products or offers
Merchant assessment
- Affirmative consent is required (separate checkbox or acknowledgment, not pre-checked)
- Consent language explicitly states trial duration, full price, and recurring nature
- Cannot complete purchase without providing consent
- System logs consent evidence for each transaction (what was shown, what was agreed to, timestamp)
- Consent records are retrievable for dispute response
- Consent capture is consistent across all platforms and channels
- Merchant can produce consent evidence within 24–48 hours for any transaction
Red flag threshold:
- No separate consent required for subscription = CRITICAL RISK (FTC violation)
- Pre-checked consent boxes = HIGH RISK (FTC violation)
- Cannot produce consent evidence for disputes = HIGH RISK
- Inconsistent consent across channels = MEDIUM RISK
- Passive or implied consent only = CRITICAL RISK
Cancellation Accessibility and Friction
Why it matters: The FTC Negative Option Rule requires merchants to provide cancellation mechanisms that are at least as easy as the signup process. Cancellation friction drives disputes: customers who cannot cancel easily will dispute the charge instead.
Low-friction cancellation reduces dispute rates, improves customer satisfaction, and demonstrates good faith compliance. High-friction cancellation (hidden options, required phone calls, retention obstacles) is both a regulatory violation and a chargeback driver.
High-Risk Cancellation Patterns
Hidden or difficult to find cancellation:
- No cancellation option visible in customer account dashboard
- Cancellation instructions buried in Help Center or FAQ
- Must call customer service during limited hours
- No online self-service cancellation available
- Cancellation link hidden in footer or requires searching
Why this is critical risk: The FTC requires "simple cancellation mechanisms". If customers cannot find how to cancel, or if cancellation requires excessive steps, this violates regulatory requirements and drives disputes.
Multi-step retention obstacles:
- Must navigate multiple pages or confirmation screens
- Required to speak with retention specialist
- Forced to provide reason for cancellation or complete surveys
- "Are you sure?" prompts repeated multiple times
- Countdown timers or limited-time offers to dissuade cancellation
Why this is high risk: While single confirmation screens are acceptable, multi-step retention flows designed to exhaust or confuse customers create friction that drives disputes.
Phone-only cancellation:
- No online cancellation option at all
- Must call during business hours (e.g., Monday-Friday 9am-5pm ET)
- Long hold times or limited staffing
- Customers in different time zones face accessibility barriers
Why this is critical risk: The FTC Negative Option Rule explicitly requires that if signup was online, cancellation must be available online. Phone-only cancellation is a regulatory violation.
Delayed cancellation processing:
- Cancellation requests take 7-14 days to process
- Customers charged again during "processing period"
- Unclear whether cancellation prevents next billing cycle
- No immediate confirmation of cancellation
Why this is high risk: Delays create uncertainty and additional charges that drive disputes.
Acceptable Cancellation Patterns
Self-service online cancellation:
- Clear "Cancel Subscription" button in account dashboard
- Single-click or simple form to initiate cancellation
- Immediate processing (cancelled within minutes)
- Confirmation email sent immediately
- No phone call required
Minimal friction:
- Single confirmation screen acceptable ("Are you sure you want to cancel?")
- Optional survey or feedback (not required)
- Clear communication of what happens next (e.g., "You will have access until [date], no further charges")
- Alternative: offer to pause, downgrade, or adjust billing (but allow cancellation without these steps)
Multi-channel cancellation:
- Online self-service available 24/7
- Phone support also available for customers who prefer it
- Email cancellation requests accepted and processed promptly
- Chat support can process cancellations
Clear documentation:
- Cancellation instructions clearly stated in customer account
- Help Center article explains cancellation process
- Confirmation email recaps cancellation terms (access ends on X date, no further charges)
What to Request from Merchant
Category
Documentation Needed
Cancellation methods
- All available cancellation methods (online, phone, email, chat)
- Screenshots of online cancellation flow
- Phone support hours and average hold times
- Email response times for cancellation requests
Cancellation process
- Step-by-step description of cancellation flow
- Number of clicks or screens required
- Retention offers presented during cancellation
- Whether cancellation can be completed without speaking to retention specialist
Processing times
- How quickly cancellation takes effect
- Whether customer is charged again during processing
- Confirmation provided to customer
- Refund policy for charges during processing period
Metrics
- Cancellation request volume
- Percentage of cancellations completed vs. abandoned
- Customer complaints about cancellation difficulty
- Dispute rate among customers who attempted to cancel
Testing Protocol
- Cancellation accessibility test: After completing test purchase, attempt to cancel:
- Can you find the cancellation option within 30 seconds from account dashboard?
- Is online self-service cancellation available?
- How many clicks or screens are required?
- Are you required to call, email, or chat to cancel?
- Friction measurement: During cancellation flow:
- How many "Are you sure?" confirmation screens appear?
- Are retention offers presented?
- Can you skip retention offers and proceed directly to cancellation?
- How long does the full process take?
- Confirmation verification:
- Is immediate confirmation displayed on screen?
- Is confirmation email sent?
- Does confirmation clearly state what happens next (access ends, no further charges)?
- Phone test (if applicable):
- Call cancellation phone number during stated business hours
- Measure hold time
- Document retention script and obstacles
- Verify whether phone agent can complete cancellation immediately
Merchant assessment
- Online self-service cancellation is available
- Cancellation option is easy to find (visible in account dashboard)
- Cancellation can be completed in 3 clicks or fewer
- Only one confirmation screen (single “Are you sure?” acceptable)
- No required phone call to retention specialist
- Cancellation takes effect immediately (no 7–14 day processing delays)
- Clear confirmation provided (on-screen and via email)
- Cancellation prevents next billing cycle
- Phone and email cancellation also available for customer preference
Red flag threshold:
- No online self-service cancellation = CRITICAL RISK (FTC violation)
- Must call during limited business hours = CRITICAL RISK (FTC violation)
- Multi-step retention obstacles preventing easy cancellation = HIGH RISK
- Cancellation processing delays resulting in additional charges = HIGH RISK
- Hidden cancellation option (not visible in account dashboard) = HIGH RISK
Pre-Charge Communications and Reminders
Why it matters: Surprise charges drive disputes. Customers who are reminded before billing are less likely to dispute, more likely to cancel proactively, and generally have better experiences.
The FTC Negative Option Rule requires merchants to send reminder notices before charging customers in certain contexts. Beyond regulatory compliance, pre-charge reminders are a best practice that reduces dispute rates and demonstrates good faith.
High-Risk Communication Patterns
No pre-charge reminders:
- No communication sent before trial ends and full-price billing begins
- No reminder before annual renewal
- Customers discover charge only when they see bank statement
- First communication is charge confirmation (not advance reminder)
Why this is critical risk: Lack of advance notice increases surprise, which drives disputes. The FTC requires advance notice in certain scenarios (free or nominal fee trials converting to paid subscriptions).
Inadequate reminder timing:
- Reminder sent only 1-2 days before charge (insufficient time to cancel)
- Reminder sent after charge has already processed
- No reminder for annual renewals (customers forget they signed up)
Why this is high risk: Reminders must provide reasonable time for customers to cancel. One-day notice is not sufficient for customers who check email infrequently.
Unclear or buried reminder content:
- Reminder email does not clearly state amount to be charged and date
- Cancellation instructions not included in reminder
- Reminder uses vague language ("your subscription will renew soon")
- Reminder email subject line does not indicate billing reminder
Why this is medium risk: If customers receive reminders but do not read them because the subject line is unclear or the content is vague, the reminder is not effective.
Acceptable Communication Patterns
Timely pre-charge reminders:
- Reminder sent 7 days before trial ends and full-price billing begins
- Reminder sent 14-30 days before annual renewal
- Sufficient time for customer to cancel before being charged
- Additional reminder 1-2 days before charge (optional but best practice)
Clear reminder content:
- Subject line clearly indicates billing reminder (e.g., "Your $79.99 subscription charge is coming on [date]")
- Email body states exact amount, exact date, billing frequency
- Includes direct link to cancellation option
- Recaps subscription terms for clarity
Confirmation communications:
- Charge confirmation email sent immediately after billing
- Receipt includes amount, date, next billing date
- Clear instructions for managing or cancelling subscription
- Customer support contact information
Welcome series for new trials:
- Immediate confirmation email when trial starts
- Recap of trial terms (duration, full price after trial, cancellation instructions)
- Value-focused communications during trial (not just billing warnings)
- Final reminder before trial ends
What to Request from Merchant
Category
Documentation Needed
Communication schedule
- Timing of all emails sent to subscription customers
- Pre-charge reminder schedule (days before charge)
- Confirmation email schedule
- Other lifecycle communications
Email content samples
- Welcome/trial confirmation email
- Pre-charge reminder emails
- Charge confirmation email
- Annual renewal reminder (if applicable)
Delivery metrics
- Email deliverability rates
- Open rates for reminder emails
- Click rates on cancellation links in reminders
- Opt-out or spam complaint rates
FTC Negative Option Rule compliance
- Written policy on reminder requirements
- Compliance assessment or legal review
- Process for ensuring reminders are sent
Testing Protocol
- Communication verification: After test purchase, track all emails received:
- Is immediate confirmation sent when trial starts?
- Are pre-charge reminders sent before trial ends?
- What is the timing (how many days before charge)?
- Are charge confirmations sent after billing?
- Content review: Evaluate reminder emails for:
- Clear subject line indicating billing reminder
- Exact amount and date in email body
- Direct link to cancellation option
- Clear, unambiguous language
- Timing measurement:
- Measure days between reminder and charge date
- Verify whether reminder timing allows reasonable cancellation window
Merchant assessment
- Pre-charge reminder sent at least 3–7 days before trial ends
- Reminder clearly states amount, date, and billing frequency
- Reminder includes direct link to cancel subscription
- Subject line clearly indicates billing reminder
- Charge confirmation sent immediately after billing
- Annual renewals receive 14–30 day advance reminder (if applicable)
- Email deliverability is high (low bounce/spam rates)
- Reminder communications are consistent (every customer receives them)
Red flag threshold:
- No pre-charge reminders = CRITICAL RISK (FTC violation for certain trial types)
- Reminder sent <3 days before charge = HIGH RISK
- Reminder does not include cancellation link = HIGH RISK
- Vague or unclear reminder content = MEDIUM RISK
- Inconsistent reminder delivery = MEDIUM RISK
Customer Support and Dispute Response
Why it matters: How merchants handle customer service inquiries and disputes reveals whether they prioritize compliance and customer satisfaction or maximize revenue at all costs.
Merchants with accessible support, reasonable refund policies, and low dispute rates demonstrate sustainable business practices. Merchants with poor support, no-refund policies, and high dispute rates are building chargeback exposure.
High-Risk Support Patterns
Inaccessible customer support:
- No phone number or email address on website
- Contact form only (no direct communication)
- Support tickets take 7-14 days to receive response
- No live chat or real-time support option
- Support available only during limited hours with long hold times
Why this is high risk: When customers cannot reach support to resolve billing issues or request cancellations, they dispute instead.
Restrictive refund policies:
- "All sales final, no refunds"
- No refunds for accidental charges, even immediately after billing
- No prorated refunds for cancelled subscriptions
- Refund requests denied automatically
Why this is high risk: Unreasonable refund policies drive disputes. While merchants are not required to offer refunds in all cases, inflexibility increases chargeback rates.
Poor dispute response:
- High dispute rate (>1% of transactions)
- Low representment win rate (<30%)
- Inability to provide consent evidence during disputes
- Generic or boilerplate dispute responses not addressing customer claims
Why this is critical risk: High dispute rates and poor dispute defense indicate underlying problems with disclosures, consent, or customer experience. Payment processors face penalties for excessive chargeback ratios.
Defensive or hostile communications:
- Customer support agents refuse cancellation requests
- Threats of collections or credit damage for disputed charges
- Refusal to acknowledge customer complaints
- Aggressive retention tactics that anger customers
Why this is high risk: Hostile support drives disputes, negative reviews, and regulatory complaints.
Acceptable Support Patterns
Accessible multi-channel support:
- Phone, email, and live chat available
- Reasonable business hours or 24/7 support
- Average response time <24 hours for email
- Short hold times for phone (<5 minutes average)
- Clear contact information on website
Reasonable refund policy:
- Refunds available for accidental charges (especially first billing after trial)
- Prorated refunds for mid-cycle cancellations (optional but best practice)
- Clear refund policy stated on website
- Exceptions made for legitimate customer complaints
Strong dispute management:
- Dispute rate <0.5% (well below card network thresholds)
- High representment win rate (>50%)
- Detailed dispute responses with consent evidence
- Proactive outreach to customers before dispute escalates
Customer-centric communications:
- Support agents empowered to resolve issues
- Refunds or credits offered to dissatisfied customers
- Apologies and accountability when mistakes occur
- Focus on long-term customer relationships, not maximizing single transactions
What to Request from Merchant
Category
Documentation Needed
Support infrastructure
- Available support channels (phone, email, chat)
- Support hours
- Average response times
- Staffing levels and training
Refund policy
- Written refund policy
- Refund request volume and approval rate
- Refund process and decision criteria
- Examples of refunded vs. denied requests
Dispute metrics
- Monthly dispute volume and rate
- Dispute breakdown by reason code
- Representment win rate
- Card network monitoring program status
Customer satisfaction
- Customer reviews or ratings
- Net Promoter Score or CSAT metrics
- Complaint volume to BBB, FTC, or other agencies
- Examples of resolved customer issues
Testing Protocol
- Support accessibility test:
- Attempt to contact support via available channels
- Measure response time
- Evaluate helpfulness and professionalism
- Test cancellation request via support
- Refund request test:
- Request refund for test purchase
- Document process and outcome
- Evaluate reasonableness of policy as applied
- Reputation research:
- Search for customer reviews on Trustpilot, BBB, Reddit
- Look for patterns in complaints
- Check BBB rating and complaint resolution
- Search for regulatory actions or lawsuits
Merchant assessment
- Pre-charge reminder sent at least 3–7 days before trial ends
- Reminder clearly states amount, date, and billing frequency
- Reminder includes direct link to cancel subscription
- Subject line clearly indicates billing reminder
- Charge confirmation sent immediately after billing
- Annual renewals receive 14–30 day advance reminder (if applicable)
- Email deliverability is high (low bounce/spam rates)
- Reminder communications are consistent (every customer receives them)
Red flag threshold:
- No accessible support (contact form only) = HIGH RISK
- "No refunds" policy with no exceptions = HIGH RISK
- Dispute rate >1% = CRITICAL RISK
- Representment win rate <30% = HIGH RISK
- Significant negative reviews citing hidden charges or cancellation difficulty = HIGH RISK
- FTC complaints or enforcement actions = CRITICAL RISK
What Good Looks Like: The Compliant Trial Subscription Merchant
When all elements align properly, a low-risk trial subscription merchant presents:
Documentation Package
Business Structure
- Clear business registration and corporate structure
- Transparent ownership and beneficial owner identification
- Professional business address and operational presence
- Appropriate business licenses
- No history of regulatory actions or FTC complaints
Checkout and Disclosure
- Clear inline disclosures on checkout page
- Unambiguous language stating trial duration, full price, billing frequency
- Prominent visual presentation (readable font, high contrast)
- Disclosures proximate to purchase button
- Mobile checkout displays same clear disclosures
Consent Capture
- Affirmative consent required (non-pre-checked checkbox)
- Consent language explicitly acknowledges subscription terms
- System logs consent evidence for each transaction
- Consent records retrievable for dispute response
Cancellation
- Online self-service cancellation available 24/7
- Easy to find (visible in account dashboard)
- Minimal friction (3 clicks or fewer)
- Immediate processing and confirmation
- No required phone call
Communications
- Pre-charge reminder sent 7 days before trial ends
- Clear subject line and content (amount, date, cancellation link)
- Charge confirmation sent immediately after billing
- Annual renewal reminders (if applicable)
Support and Disputes
- Accessible multi-channel support
- Reasonable refund policy
- Dispute rate <0.5%
- Positive customer reviews
- No regulatory complaints
Example: Compliant Trial Subscription Profile
Company: FitStream App
Model: 14-day free trial, then $29.99/month for fitness streaming service
Checkout disclosures:
- Inline disclosure on checkout page: "Start your 14-day free trial today. You will be automatically charged $29.99 per month starting on [exact date] unless you cancel. Cancel anytime."
- Font size: 12pt, black text on white background
- Positioned directly above "Start Free Trial" button
- Non-pre-checked checkbox: "I understand I will be charged $29.99/month starting [date]"
Cancellation:
- "Cancel Subscription" button visible in account settings
- Single confirmation screen: "Are you sure? You'll lose access to all workouts."
- Immediate processing: "Your subscription is cancelled. You'll have access until [date], no further charges."
- Confirmation email sent
Communications:
- Immediate welcome email: "Your 14-day free trial has started. You'll be charged $29.99 on [date] unless you cancel."
- 7-day reminder: "Your trial ends in 7 days. You'll be charged $29.99 on [date]. Cancel anytime if you don't want to continue."
- Charge confirmation: "You've been charged $29.99 for your FitStream subscription. Next charge: [date]. Manage or cancel anytime."
Support:
- Live chat available 16 hours per day
- Email support with <4 hour average response time
- Phone support Monday-Friday 8am-8pm ET
- Refund policy: Full refund if you cancel within 48 hours of first charge
Performance:
- Dispute rate: 0.3%
- Representment win rate: 68%
- Trustpilot rating: 4.2/5 stars
- BBB rating: A+
- No FTC complaints
This profile represents acceptable risk for payment processing.
Common Classification Errors
Mistake: Focusing on product quality instead of disclosure quality
The problem: Assuming that if the product is legitimate and valuable, customers will not dispute. Product quality and disclosure quality are separate issues.
What to do: Evaluate disclosure and consent practices independently of product assessment. Even excellent products generate disputes if customers do not understand the billing terms.
Mistake: Accepting merchant claims without verification
The problem: Merchant states "we have clear disclosures" or "we send reminders" without verifying actual practices.
What to do: Complete test purchases. Review live checkout flows. Request email samples. Verify merchant claims against reality.
Mistake: Not testing mobile checkout
The problem: Desktop checkout may have clear disclosures while mobile checkout (where disclosures are truncated or hidden) drives most disputes.
What to do: Test checkout on mobile devices. Verify that mobile experience meets the same disclosure standards as desktop.
Mistake: Ignoring dispute rate benchmarks
The problem: Accepting merchant assurances that "disputes are normal for subscription businesses" without quantifying actual rates.
What to do: Request specific dispute rate data. Compare to industry benchmarks. Rates above 0.5% indicate problems. Rates above 1% are critical risk.
Mistake: Not reading customer reviews
The problem: Skipping customer review research because merchant-provided documentation looks acceptable.
What to do: Search Trustpilot, BBB, Reddit, and Google reviews for patterns. If customers consistently complain about "hidden charges" or "can't cancel", believe them, not the merchant.
Mistake: Evaluating disclosure presence vs. disclosure prominence
The problem: Confirming that subscription terms are disclosed somewhere without evaluating whether they are conspicuous at the decision point.
What to do: Ask "Would a reasonable customer see and understand this disclosure before clicking the purchase button?" If disclosures are present but buried, they fail the standard.
The Critical Question
When evaluating whether a trial subscription merchant operates with acceptable risk, ask:
"Do you test the cancellation path as part of underwriting?"
If you complete a test purchase and attempt to cancel, you will experience what customers experience. If cancellation is easy, disclosures are clear, and reminders are sent, the merchant likely operates responsibly.
If you struggle to find the cancellation option, must call during limited hours, or face aggressive retention obstacles, that is what every customer experiences, and it predicts high dispute rates.
This single action (testing the full customer journey from signup through cancellation) reveals more about the merchant's practices than any document review alone.
Ballerine's Role
Ballerine provides infrastructure to make this complex assessment manageable and scalable: automated checkout monitoring to detect when disclosure practices change post-onboarding, dispute rate tracking to identify emerging risk before card network penalties accrue, and customer communication analysis to verify that pre-charge reminders are actually being sent.
The foundational knowledge in this guide equips risk teams to ask the right questions during merchant onboarding: where are subscription terms disclosed on the checkout page, how many clicks to cancel, what reminders are sent before charging, and what is your dispute rate. These operational realities determine risk exposure, regardless of what the merchant claims in application questionnaires.
For sophisticated risk assessment of subscription merchants at scale, our merchant monitoring capabilities maintain continuous visibility across portfolios, detecting when compliant practices degrade into high-risk patterns before regulatory exposure and chargeback penalties accumulate.
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