'Free trial' offers can bring unwanted credit card charges
Log on to the Internet and prepare to be greeted with advertisements offering the latest energy booster, anti-aging cream, compact discs or other products as part of a "risk-free trial offer." If the ads sound too good to be true, it's because they often are.
"Most 'free' offers that you find on a website or social networking site are going to end up costing in one way or another," says Alison Southwick, a spokeswoman for the Better Business Bureau. "Many of these offers fall under the category of 'negative option' marketing, a tactic where consumers' credit cards are charged for additional products when they fail to cancel after their 'free trial period' has expired."
Thousands of complaints
Southwick says that the BBB has received more than 3,500 complaints from consumers across the country who thought they were signing up for free trial-offers for items such as acai-berry weight loss products and information on how to work from home. "We have also received thousands of complaints from people who signed up for a free-trial offer of acai-berry weight-loss products and were charged month after month," Southwick says.
In May, the Federal Trade Commission (FTC) announced it would conduct a review of its "negative-option" rules, a process that could lead to tougher regulations on the practice.
While negative-option marketing isn't considered illegal, it is misleading. When consumers respond to an ad claiming they can receive a free 30-day supply of a product for a nominal shipping fee of $5.95, they often mistakenly believe it's a one-time purchase. It's all too easy to miss the fine print that may state the free trial period typically only lasts 12 to 14 days, and you will continue to receive regular shipments of the product at full price unless you notify the company with a request to cancel. Since the cancellation period is so brief, many consumers often don't realize their credit cards are being charged for additional costs until the charges show up on their monthly statement.
Hatti Hamlin, a public relations consultant from Orinda, Calif., learned the hard way that free offers often have a catch.
"I went to what I thought was a free site to get my credit report and after clicking on 'free credit report,' the company automatically added a monthly credit monitoring service," Hamlin says. "I didn't notice this charge as I checked out on the website -- even though they require a credit card, they are careful to state that the charge is "$0" -- until the next month when you start getting whacked with a $14.99 a month charge."
Even then, it took several months before Hamlin noticed the charges on her credit card bill.
"It wasn't labeled 'credit monitoring service,' but had some alphabet-soup name to the company and no description of the charge," she says. "When I called the company, they were nasty as could be and kept telling me they had clearly notified me when I signed up for my 'free' report that if I didn't cancel the additional service within one month I would start being charged for it! I filed a Better Business Bureau complaint, wrote a letter, and finally, without admitting they were wrong, they agreed to refund the charges."
Hamlin later found that more than 5,000 complaints about this practice had been formally lodged with the BBB.
Robert Pagliarini, president of Pacifica Wealth Advisors, an investment and financial planning firm in southern California, was intrigued by an advertisement for an energy drink that can be used as an antioxidant supplement.
"I ordered the free trial and was charged $7.95 for shipping and handling," Pagliarini says. "I didn't like the taste of the product when I received it and immediately called to cancel. The company said that my first month's subscription, costing $69.95, had already been shipped and charged to my credit card."
The company advised Pagliarini to return the shipment and told him they would reimburse him for the cost of shipping. Four months later, he is still waiting to be credited.
"In retrospect, I wish that I had taken a few minutes to research the company," Pagliarini says. "After a brief Internet search, I found many other consumers had encountered the same problem with this particular company."
Ways to prevent getting scammed
While the FTC does monitor negative option marketing practices, Southwick says there are steps consumers can take to ensure they don't incur unwanted credit card charges.
- Conduct due diligence. Just because an ad is on a website that you trust, it doesn't mean you can trust the advertiser. The BBB offers a database of reliability reports on more than 400,000 companies. Consumer websites such as www.ripoffreport.com and www.complaintsboard.com also list complaints from consumers who fell for negative-option marketing offers.
- Know what you're signing up for. Southwick says it's important to read the terms and conditions of an offer and to ask questions, such as when you need to cancel in order to prevent unwanted future charges. "And don't assume the seven-day grace period starts after you've received your order," she says. "Sometimes you will be charged seven days after your initial order has been placed."
- Read the fine print. Does that teeny-tiny clause at the end say that the free offer is related to a membership or extended contract? Do you have to contact the company within a certain period of time to avoid receiving more merchandise? Who do you have to contact and do you cancel by phone, e-mail or letter? How long do you have to decide if you want to keep the product before incurring additional charges?
- Watch your credit card statement closely. If you see any charges you don't recognize, call your credit card company immediately.
If you have done all of the above and continue to have problems with the company, it's time to file a complaint with the BBB and the FTC, who both work to prevent fraudulent and deceptive business practices. To file a complaint, call the FTC at (877) FTC-4357 or visit the BBB's website.
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Don't allow a convenience to become a curse. If you frequently purchase with plastic, CreditCards.com offers useful tips to help you become a savvier shopper.
If you believe a company has charged you in error, you should also contact your credit card company to dispute the charges.
"You are ultimately held responsible for the charge until a dispute process has been resolved with your credit card company," says Gail Hurdis, spokeswoman for Chase Credit Card Services. "When a customer contacts us, our team of dispute experts immediately begins working to resolve the issue."
If the inquiry is, in fact, a charge that is disputed by the customer due to merchant service or quality, Hurdis says the dispute adviser will spend time resolving the issue while the customer is on the phone.
"Our advisers will conference the merchant in on the call with the customer to help resolve the issue more quickly," she says. "Our approach to customer service in the dispute area has resulted in 72 percent of customer inquiries being resolved on the first point of contact and our customers receiving an immediate credit or a reversal of charges when they have a disputed charge."
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