Millions
of
Americans
pay
for
Netflix,
doling
out
anywhere
from
$6.99
to
$22.99
a
month.
It’s
a
common
belief
that
you
can
get
out
of
recurring
charges
like
this
by
canceling
your
credit
card.
Netflix
won’t
be
able
to
find
you,
and
your
account
will
just
go
away,
right?
You
wouldn’t
be
crazy
for
believing
it,
but
it’s
a
myth
that
canceling
a
credit
card
will
stop
your
recurring
charges.
Nearly 46% of Americans opened a new credit card last year, according to Forbes, which means millions of Americans also canceled old ones. When you switch cards, Netflix doesn’t just stop your service — they just start charging your new card. There’s a largely hidden service that enables Netflix and most other subscription services to keep throwing charges at you indefinitely.
“Banks may automatically update credit or debit card numbers when a new card is issued. This update allows your card to continue to be charged, even if it’s expired,” Netflix says in its help center.
You can thank Visa for this. In 2003, Visa U.S.A. started offering a new software product to merchants called Visa Account Updater (VAU), according to a 2003 American Banker article. The service works with a network of banks to create a virtual tracking service of Americans’ financial profiles. Whenever someone renews, cancels, or opens a credit card, banks automatically update the VAU. This system lets Netflix and countless other corporations charge whatever card you have on file. It’s a seamless switch that allows the dollars to keep flowing toward corporate America, while you don’t have to lift a finger.
“Visa understands the challenges faced by merchants when it comes to staying on top of account information changes,” Visa say in marketing materials to corporations. “VAU delivers updated cardholder account information in a timely, efficient, and cost-effective manner, benefiting all parties involved in the electronic payment process.”
VAU was an instant success, quickly adopted by banks and corporations around the world. Visa says its service follows you when switching between any major credit card provider, whether it’s Discover, Mastercard, or American Express. Some customers of Visa’s tracking service include Netflix, Amazon, Facebook, Google, and Disney, according to a 256-page list of the software’s adopters from 2022. VAU allows merchants to keep customers roped into their subscription services, but Visa also argues it helps customers.
“Outdated account-on-file information can lead to declined transactions and cardholder inconvenience—and ultimately introduce the risks of service cancellation and customer dissatisfaction,” Visa said in marketing materials.
Visa’s
not
entirely
wrong
about
this.
If
your
electricity
or
internet
bill
is
tied
to
your
credit
card,
you
could
be
in
a
real
bind
if
you
forget
to
update
your
new
card.
However,
practices
like
these
can
also
keep
people
bound
in
endless
cycles
of
payments
that
follow
them
everywhere.
Visa did not respond to Gizmodo’s request for comment.
Before
services
like
VAU
popped
up,
switching
your
credit
card
was
a
pretty
surefire
way
to
get
out
of
recurring
charges,
whether
you
wanted
to
or
not.
When
Bank
of
America
adopted
VAU
in
2003,
it
described
the
product
as
a
solution
for
billing
changes
that
had
once
left
merchants
with
“unappealing
choices.”
“One
would
be
that
the
merchant
would
shut
off
the
customer’s
service,”
said
a
Bank
of
America
executive
in
a
2003
press
release.
“Another
would
be
that
the
merchant
would
continue
the
service
but
send
the
customer
a
nasty
letter.”
So
VAU
really
came
about
with
the
onset
of
the
internet.
Practices
like
this
have
become
increasingly
popular
in
the
Internet
age.
Subscription
services
have
become
easier
to
start,
but
increasingly
difficult
to
stop.
Recurring
charges
can
truly
follow
you
to
the
ends
of
the
Earth
unless
you
outright
contact
the
company
to
stop
them.
Visa’s
Account
Updater
is
only
really
marketed
to
businesses,
so
most
consumers
have
no
idea
it
exists.
I’d
bet
most
people
have
no
idea
there’s
a
way
to
opt
out
of
Visa’s
credit
card
tracking
service,
and
even
fewer
know
they’re
default
opted
in.
It’s
largely
a
hidden
service
to
the
average
person,
with
no
clear
indicator
from
your
bank
or
subscription
service
that
you’re
being
tracked
in
this
way.
Credit cards are also widely regarded as a more anonymous way to move through the financial world. While they typically are more secure than using a debit card, make no mistake, banks are still tracking your every move. The VAU just allows them to coordinate with corporations to keep your financial information constantly up to date.
The
VAU
undoubtedly
offers
some
benefits
to
consumers.
However,
it’s
important
to
understand
why.
The
system
reduces
“churn”
for
corporations,
and
ensures
you
can
keep
paying
them
your
dollars
no
matter
what’s
going
on
in
your
financial
world.
Banks
make
it
effortless
to
keep
paying
these
recurring
charges.
However,
stopping
them
can
be
much
harder.
If
you
really
want
to
stop
a
subscription,
there’s
still
no
substitute
for
calling
up
the
company
and
canceling.
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