Bankruptcy Questions Answered

FTC & BBB: Avoid Free Trial Scams

The Federal Trade Commission recently released a statement warning about the potential cost of free trial offers that end up costing consumers significant amounts of money. The warning, made jointly by the FTC, the Better Business Bureau (BBB) and Visa, includes red flags to watch out for and action to take to avoid getting scammed.

The “Negative Option”

Offering free trials is a common technique companies use to introduce consumers to new products and services. Sometimes, though, free trials are offered by scammers bent on collecting money from unsuspecting consumers. Often, the scam works like this:

• Emphasis on free: An online advertisement may offer something free (usually for a trial period), available to you by clicking a link. In most cases, you’ll have to enter a credit card number of some sort.
• Excessive fine print: In the fine print, the offer notes that, once the trial period is over, you will be charged for the product or service unless you cancel it. This is known as the negative option, because you must opt out in order to stop paying.
• Charges to your card: Once the trial period ends, your account will be automatically charged on a regular basis for the product or service. Even if you cancel after a month, you can end up paying significant money for something you never wanted.

Avoiding Free Trial Scams

So how can you make sure you aren’t lured in by an expensive online scam? Here are some tips, as posted on the FTC’s web site.

1. Read everything. If there’s more fine print than you care to sift through, that’s usually a bad sign. Any time you’re giving out personal information, make sure you know exactly what you’re getting yourself into.
2. Note the checks. Some offers trick customers by pre-checking boxes that seem insignificant but actually include continued-payment agreements. Uncheck any boxes that offer something you don’t want.
3. Review your statement. When your credit card bills arrive each month, check for strange or questionable charges.
4. Take action. If you do find any charges that you don’t agree with, call the merchant and ask to have the charge clarified, and, if necessary, removed. If you cannot work anything out with the merchant, contact your card issuer and contest the charge.

If you think you’ve been scammed by a free trial offer, don’t hesitate to file a complaint with the FTC or contact the BBB in your state.

Additional Resources

FTC’s Risk-Based Pricing Notice (PDF)