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Byline: BARBARA LOVE

If you are renewing subs by credit card and debit card, you should be aware of Regulation E of the Electronic Funds Transfer Act, enforced among non-financial institutions by the Federal Trade Commission. Regulation E requires a signature for recurring charges (in the case of publishers, a renewal). This could pose an obstacle for telemarketed renewals, including continuous renewals.

The regulation has been in effect for a long time and it hasn't been a problem - yet. Until now both the credit card and the debit card have been treated the same by agents and processing companies that publishers work with - and thus the same by publishers.

Visa and MasterCard have had an "accept all cards rule" for companies they do business with and have not disclosed to retailers and processors which card is which. Consumers themselves often don't know which is which when they pull out their card.

Publishers have done nothing wrong because they have not been told by the processing companies which transactions are by credit card and which are by debit card.

But processing companies have announced they will provide customers (publishers and their agents among them) with information distinguishing credit card transactions from debit card transactions, and that could cause problems, particularly with phone renewal solicitations.

The regulation says a phone recording will not suffice for authorization for recurring charges to a debit card, explains an industry attorney familiar with the regulation. Not only will that publisher or agent have to get a signature, that person may have to use different language in promotion.

The expected change in reporting is the result of a lawsuit against Visa and Mastercard by Wal-Mart and Walgreen which has gone on for years, but was settled privately in 2003, according to the attorney.

The retailers wanted to pay a lower percentage for debit card transactions, arguing that there is no risk for the credit card companies; the money comes right out of the customer's account. The settlement requires the credit card companies to differentiate between credit card and a debit card transactions (and lower the fee for debit cards).

The E regulation does not apply to renewals made online. Online, a subscriber can use an electronic signature. So a click online would be acceptable. The real issue is transactions occurring over the phone.

"The situation could be quite onerous," says Chip Block, president of USA Pubs. "It threatens continuous service."

The Magazine Publishers of America is involved in a "loose coalition" to try and resolve the problem with telemarketing renewals. But very little is going on right now.

Because the settlement was private, the attorney explains, it is not clear who will enforce this settlement. "We are waiting to see what will happen."