New Visa Rule Takes Aim at Third-Party Merchant Cross Sales

SAN FRANCISCO—In January, Visa sent out a policy statement to its merchants saying it would no longer tolerate what it calls deceptive marketing and unfair business practices, including certain types of cross sales.

Tuesday, Visa announced steps intended to ensure that merchant practices abide by the previous warning. Specifically, the new rule prohibits “web merchants from providing cardholder information to other companies without the consumer's knowledge or active consent.” The move is intended to curb the worst practices associated with what Visa refers to as “data pass” and the online porn industry refers to as “cross sales.” The new rule, though crafted to target cross sales, does not appear to be directed at IPSPs (Internet Payment Service Providers), otherwise known as third-party processors, which are widely used by adult webmasters.  

“The misleading practice, called ‘data pass,’ usually involves a consumer shopping at a familiar retailer,” said Visa, in a press release. “At checkout, the consumer receives an offer for a discount or reward and does not realize it is from a different merchant and comes with unexpected monthly membership fees or recurring charges. Such deceptive marketing can result in high levels of consumer disputes and degrades the efficiency, reliability and security of the payment system. According to a 2009 U.S. Senate Commerce Committee staff report, 35 million consumers have paid $1.4 billion for ‘data pass’ marketing offers.”

The “data pass” practice is not unknown to Congress; last year, the U.S. Senate Committee on Commerce, Science and Transportation investigated the issue and merchants who use it. According to its chairman, Senator John D. (Jay) Rockefeller IV, the 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.”

A lot of online porners also utilize cross sales, which became extremely popular several years ago as direct sign-ups began to decline. The practice of offering “upsells” or ancillary “benefits” or “options” is certainly not new to all forms of merchant products both adult and mainstream, but online the practice, if used fraudulently—which basically means taking measures to conceal the added charges—can reap substantial returns.

When cross sales are pre-checked, the consumer will have to realize they exist and then take measures to opt-out at some point (if they so desire) or get hit with recurring charges of up to $100 a month or more. Though a life saver for some programs, one potential downside to the practice is that it alienates consumers, many of whom have been burned in the past by online scams. The flip side of that argument is that, if used properly—which means making sure the “offers” are clearly visible and follow-up emails are sent—the practice is an entirely legitimate tactic to increase sales.

For the moment, Visa only appears interested in targeting the way in which the practice is being used by merchants with different merchant accounts. For those who have their own merchant accounts, including IPSPs, the ability to cross sell within the same account still seems to be allowed.

“Visa's rules already prohibit merchants from sharing a cardholder's account number and other Visa transaction information with any entity that is not directly involved in completing the transaction, preventing fraud, or as required by law,” the Visa announcement said. “To address the data pass practice, merchants will now have to prompt consumers to re-enter their card information to accept a subsequent offer from a third-party merchant. This provides a clear signal to cardholders that a second purchase is being initiated and protects them from questionable marketing practices.”

According to Epoch’s Director of Communication, Rand Pate, the IPSP will not have to make any changes to its billing practices.

“Epoch is already compliant with the rules,” he told “We do not pass card data to other third parties so our policies are not affected. The stand that VISA is taking primarily affects companies with their own merchant accounts that pass card data to other companies to make cross sells." also contacted leading affiliate program TopBucks, which utilizes Epoch-managed cross sales on some of its sites.

“We have always thought of being heavily dependent on cross sale revenue as a short-lived business strategy, given the obvious abuse of cross sales by many merchants, both within the adult industry and in mainstream,” the company told “This is one reason why TopBucks steered clear of relying too much on cross sale revenue, and focused our efforts on building direct sales to our sites. This change will have no real impact for us, but we anticipate that it will roll into a much larger issue than just losing incoming cross sales for some companies, as it is bound to create chargeback ratio problems for companies that are not able to cover their loss of incoming cross sales with their current volume of direct sales.”

The program also concurred with Epoch’s assessment of the limitations of the new rule.

“We’ll definitely be evaluating the new policy in greater detail to ensure we’re in compliance,” it said. “At first glance, we do interpret the rule to mean that cross sales within the same single merchant are allowed, which would likely mean that cross sells among third-party IPSP clients are allowed, as well.” has requested legal input as to the actual meaning and limitations of the new rule, and is awaiting a reply.