FTC Warns Of Online Free Trial Scams

    December 21, 2009

The Federal Trade Commission has joined an effort to warn consumers about deceptive online marketing related to free trial offers that require people to cancel or opt-out of a recurring charge for future products or services.

The Director of the FTC’s Bureau of Consumer Protection, David C. Vladeck, along with officials from Visa and the Better Business Bureau (BBB) are cautioning consumers about the free trial feature, known as a "negative option." In a negative option feature, a company takes a consumer’s failure to cancel a free trial offer as permission to begin charging for the service.

 The FTC says many businesses use this billing process appropriately, others pre-check consent boxes, bury details of the offers in fine print, terms and conditions, and make cancellations or returns difficult, landing people in a cycle of recurring charges for products and services they do not want.
"Free trial marketing can be convenient for consumers-if the terms are clearly spelled out beforehand," Vladeck said. "Legitimate marketers don’t hide critical information about costs or cancellation policies to get their customers to agree to future charges."

The FTC, Visa and the BBB offer the following tips to online shoppers on how to spot misleading free trial offers and how to deal with unauthorized charges:

  •     Take time to read and understand all terms and conditions, so a free trial doesn’t turn into a costly purchase you didn’t intend to make.
  •     Pay particular attention to any pre-checked boxes before you submit your payment card information for an order. Failing to un-check the boxes may bind you to terms and conditions you don’t want.
  •     Review credit card statements when you get them for any unauthorized charges, and notify the card issuer promptly of any unusual activity or unauthorized charges.
  •     Try to resolve the situation with the merchant. If you’re unsuccessful, contact the card issuer immediately to dispute the charge.

Consumers who think they have been victims of deceptive marketing and who have not been able to resolve the issue with the merchant should call their credit card company to dispute the charge. Consumers can also file a complaint with the FTC or their local BBB.

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