233 million unauthorized and fraudulent charges per year costing consumers over $14.3 billion ? That’s what some are claiming. While these numbers are probably inflated, there’s little dispute that an increasing number of consumers are being hit with unauthorized credit card charges through sneaky practices by online merchants. Examples of these fraudulent charges include:
a free-to-trial offer that expires and is automatically converted to a full membership or subscription. “free-to-trial” charges, which can apply when you sign up for a free trial from services like Netflix, Amazon Prime or LinkedIn Premium. Consumers incur these charges often because they fail to read the fine print in service agreements. include recurring membership fees, subscription fees, unwanted auto-renewals, cost creep (where a service or subscription gradually increases its cost over time), hidden fees such as foreign transaction fees or car rental surcharges and billing errors.
a “negative option,” in which merchants offer free trials that later launch a series of automatic credit card charges if consumers forget to cancel. A consumer might purchase something — a movie or airline ticket or flower delivery service — then click a pop-up advertisement for an additional discount, and unknowingly become automatically enrolled in a membership-based savings program, usually to the tune of around $15 per month.
hidden or deceptive charges, or a subscription auto-renewals that you didn’t know were coming.
Others include unknown subscriptions, recurring memberships and shipment plans. Some in the business are starting to call these fraudulent charges “gray charges” because they might be but aren’t necessarily illegal. Often they are generally caused by consumer misunderstanding or inattention. Yet, the numbers may be adding up to huge losses for consumers. You may not be able to completely avoid such charges, but be aware of them and analyze your monthly bill. If you see something you do not recognize, contact the company associated with the charge and ask what it is. You may be able to save a lot of money just by keeping a closer eye on your debit and credit card accounts. Not every such charge is reversible, because in many cases the consumer agreed to the terms, even if they don’t recall or didn’t realize what they were agreeing to. In some cases, such as when you have canceled a subscription and keep getting charged, you have an easier case to make.
That’s why it’s important to avoid a “set it and forget it” mentality when signing up for free trials. When you sign up for one, consider setting up a calendar reminder toward the end of the trial period so that you can cancel it if you decide you’re not crazy about it. That’s especially important when it’s an annual subscription versus a monthly one. Accidentally letting your Aereo free trial become a paid subscription will cost you $8 if you don’t cancel in time; letting your Amazon Prime membership roll over will cost you $79, as it’s charged on an annual basis. Some apps, such as Billguard, claim to help you identify such charges. I’ve not used this service, so I can’t recommend it yet. But these so-called gray charges are very real and are yet another compelling reason why it is essential that consumers scrutinize their credit and debit card statements.