What’s That Doing On My Credit Card Bill?

July 24, 2008

By Terry Smiljanich and Jim Ross

rewards programsEver bought anything online and been offered various “rewards programs,” “free trials,” or “extra 10% discounts”? 

Ignored them or turned them down? Better check your monthly credit card statement. 

Among the various purchases on your card you may find a monthly charge of as little as $9.95 for these innocuous sounding programs from companies you’ve never heard of. How the heck did they get your credit card number and permission to charge you?

They’re called “negative-option” plans, in which consumers are automatically charged for services or products until they take affirmative action to cancel them. Pop-up ads and check boxes authorize a “free” trial in buying, shopping, and travel clubs, privacy services and health programs. The authorization may come from an errant click or through an automatic sign up that flashes by unnoticed by internet shoppers. 

By clicking “yes” or failing to clear a checkbox, you have just authorized the company you are dealing with to give your credit card number to a third party vendor. It’s there in the fine print that nobody reads. Typically, after 30 days of the “free” program, your card will begin receiving monthly charges until you cancel. 

One web-savvy shopper told us of a purchase she made through VistaPrint, an online graphic design and printing company. When she accidentally clicked a “$10 savings” window, she found herself signed up for “Passport to Fun,” costing $14.95 a month, and something called “Shopping Essentials,” both automatically charged to her card. After repeated telephone calls over two months, she finally got these services cancelled. She’s still waiting for her refunds.  

Thousands of consumers have complained. The company’s response? You clicked “yes” didn’t you? They’ll cancel the service, but you are typically out past payments unwittingly made by you.

It’s all perfectly legal, but more and more state prosecutors are finding that they are being used in deceptive and fraudulent ways. As Iowa’s Attorney General charged, “many consumers don’t know they are members, are not aware that they are being charged yearly or monthly membership fees, and make no use whatsoever of the so-called membership benefits.”  

Memberworks was one of the largest “negative-option” vendors. After settling with prosecutors in five states, it changed its name to “Vertrue, Inc.” 

Companies that have tie-in agreements with Vertrue companies include VistaPrint, Victoria’s Secret, and Classmates.com. Vertrue boasts on its web pages that it has more than 18 million “members” with over “20 different membership discount programs to choose from.” Business is good, with over $800 million in revenues last year.