Posts Tagged ‘CreditCards.com’

Poll: Recurring charges are easy to start, hard to get out of – CreditCards.com

Gen-Xers, millennials most likely to get tricked into automatic payments

By Brady Porche  |  Published: August 21, 2017
Staff Reporter

Focusing on credit scores and what consumers can do to improve them

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Consumers are easily ensnared by sneaky recurring charges, and many find them hard to escape, according to a new CreditCards.com survey.

Our national telephone survey of 1,002 U.S. adults found that 35 percent had set up an account – such as a streaming TV service, a magazine subscription or a gym membership – that enrolled them in automatic payments without them realizing it. Additionally, 42 percent of consumers said it’s difficult to turn off recurring charges.

Federal laws prohibit companies from tricking people into paying for things they don’t want. However, many online merchants use “negative option” offers, which require consumers to cancel services or product shipments to avoid recurring charges, to turn a profit. And they’re not always used in ways that serve the consumer’s best interest.

“The main reason consumers get caught in these negative option offers is the material details, conditions and terms are not clearly and conspicuously shown,” said Bonnie Patten, executive director of the consumer watchdog group Truth in Advertising.

Of course, not everyone who gets charged unknowingly is the victim of a scam. And many do nothing to remedy the situation. Our survey found that approximately 9 million consumers (after an extrapolation based on the entire U.S. adult population) kept subscriptions and memberships for which they were unwittingly charged rather than cancel them. Young millennials (ages 18-26) were more likely than any other group to let recurring charges live on.

Here’s what our survey revealed about how consumers handle subscriptions and other recurring charges:

  • Younger consumers are more easily snookered. Gen-Xers (44 percent) and millennials (37 percent) were mostly likely to get hung up in automatic payments. Gen-Xers were also the most likely to say it’s “very difficult” to turn off automatic payments, followed by baby boomers.
  • Older folks steer clear of traps. Members of the Silent Generation (ages 72 and older) were significantly more likely than any other age group to say they’d never signed up for automatic payments without realizing it.
  • Free trials anything but. A full 48 percent of respondents said they signed up for free trials that automatically renewed without their knowledge. Only 9 percent of those people kept the subscriptions after the trial period ended.
  • A tight budget can be a safeguard. Consumers who make less than $30,000 per year were least likely to say they inadvertently fell into recurring charges.

The scientific survey of 1,002 adults was conducted Aug. 3-6 via landline and cellphone. See survey methodology.

Negative options
If you’ve ever been hit with recurring charges you didn’t expect, chances are you were either deceived or you just weren’t paying close attention. Many of us are guilty are signing up for trial accounts and services online without reading the full terms and conditions – even the ones that don’t ask you to study a 10-page PDF document with small type.

But if you’re ever asked to provide payment information to proceed with what you think is a one-off service, it’s critical to find out for sure. There are merchants out there whose business models largely depend on consumers not fully understanding their offer terms.

“What we’re seeing is that they’re not making it easy for a consumer to tell that they’re going to be put into a negative option offer,” Patten said. “For example, they may use a pre-checked box, or the ability to decline a negative option offer is at the bottom of the page, in a smaller font and a color that’s not very visible.”

Although the Federal Trade Commission (FTC) has a rule that targets negative option offers, it’s largely obsolete these days.

“The negative option rule … has to do with old ‘book-of-the-month club’ issues and a very specific type of negative option that we normally don’t see anymore,” said James Kohm, director of the FTC’s enforcement division.

But consumers are broadly protected by Section 5 of the FTC Act, which prohibits “unfair or deceptive” practices that could mislead them or cause harm. Additionally, the Restore Online Shopper’s Confidence Act (ROSCA) protects consumers from getting charged for services online without their consent and mandates that merchants fully disclose their terms. Congress is also considering a bill titled the Unsubscribe Act that would increase consumer safeguards against deceptive online negative option offers and make it easier to cancel them.

Earlier this month, the FTC invoked Section 5 and ROSCA in shutting down an online marketing operation for scamming consumers into paying $200 a month for tooth whiteners and other products. The agency said customers were lured through a mix of misleading claims, hidden disclosures and confusing terms into low-cost “trials” that turned into pricey subscriptions if they didn’t cancel within eight days. In a separate case this month, the FTC charged a firm operating a bogus discount club with debiting more than $40 million from the accounts of consumers who believed they were applying for payday loans or cash advances.

Kohm noted that major online subscription services such as Netflix, Spotify and Amazon Prime are unlikely to engage in these kinds of deceptive practices due to their popularity and their reputations. (The companies’ respective policies contain language that spells out their billing practices.) But he said “fly-by-night” operations that only use products as a fig leaf for their nefarious schemes don’t care about reputational damage, so there’s little incentive for them to play by the rules.

How to avoid negative option and free trial traps
The internet is too big for federal authorities to track down every shady online seller, so consumers must use their own judgment and be vigilant.

“You need to decide whether you want to participate in negative options and free offers,” Kohm said. “You can also decide whether you’re dealing with a company that you know and trust.”

Kohm also recommends contacting your state attorney general’s office or doing a simple Google search to find out if a company offering a negative option or a free trial has elicited complaints from other consumers.

Meanwhile, be suspicious of any offer that promises you something for nothing – especially if it still asks for your credit card or bank account information.

“Anytime a consumer sees the word ‘free,’ they should immediately look for the hook the company is laying out in front to catch them,” Patten of Truth in Advertising said. “‘Free’ rarely actually means free. Almost inevitably, if consumers are being offered a free trial, it’s so the company can get their credit card information and enroll them in one of these negative option offers.”

“Anytime a consumer sees the word ‘free,’ they should immediately look for the hook the company is laying out in front to catch them.”

If you are snagged by a not-so-free trial or other account that charges you more than you intend, you can dispute the payments with your credit card issuer.

“Customers can cancel a one-time or recurring ACH payment by contacting us with the payee or merchant name and dollar amount of the payment,” Betty Riess, spokeswoman for Bank of America, said in an e-mail.

$10 per month eventually turns into $120 per year
Unexpected recurring charges are at best an inconvenience and at worst a budget-buster. A charge of $10 or so per month may seem like small change to many consumers. However, it adds up over time if you forget about the account or put off canceling it.

But by steering clear of automatic payment traps, you’ll have more money to cover recurring charges for things you actually want and need.

Survey methodology
CreditCards.com commissioned Princeton Survey Research Associates International to obtain telephone interviews with 1,002 adults living in the continental United States. Interviews were conducted by landline and cellphone in English and Spanish from Aug. 3-6, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error is plus or minus 4 percentage points.

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Do you have questions about credit cards? Check out this source.

offers news and advice.

May 22, 2017 from 6 steps to close accounts when a cardholder dies

When someone dies, the task of notifying financial institutions and closing credit card accounts can easily be forgotten or pushed aside.

Unfortunately, if card accounts are not dealt with properly and immediately, problems can crop up that make life more difficult later. Family members and others may innocently – or not so innocently – continue to use the deceased person’s card. Identity thieves troll the obituaries and online records to learn about recent deaths, so they can steal from accounts or create new ones. Banks may send out late notices and add extra fees when the next payment is missed…

Additional information provided by Maine’s Bureau of Consumer Credit Protection: 

As the article states, creditors like a credit card company come last in priority, just in front of heirs.  Secured claims, taxes, administrative expenses and various rights of spouses and heirs all come before unsecured creditors receive anything.  If there is no money left in the estate, such creditors will receive nothing.

In Maine, a notice to creditors is published by the clerk of probate.  Creditors (other than the government) have four months to file a claim or the collection of the debt is barred.  Payment is not usually made until at least 6 months has passed and usually longer.

May 19, 2017 from Suspect card fraud? How to file a claim

If you spot an unauthorized purchase on your credit or debit card statement, will you know what to do, who to call, and how to protect your account?

Forty-seven percent of Americans have experienced card fraud in the past five years, according to the ACI Worldwide 2016 Global Consumer Card Fraud report.

Knowing what actually constitutes fraud, and what to do when it happens, is the best way to protect yourself from additional bogus charges, and potential liability for not reporting it in a timely manner…

 

More information provided by Maine’s Bureau of Consumer Credit Protection: 

Mainers are uniquely protected by one of the finest file freeze law in the U.S.

Maine’s file freeze law went into effect on 10/15/15, and allows adult Maine residents to place a lock or freeze on their credit files with the major reporting agencies: Equifax (1-800-349-9960), Experian (1-888-397-3742) and Trans Union (1-888-909-8872).   Each consumer reporting agency (CRA) has a separate file freeze number (previously listed), which allows consumers to speak on a secure, automated line—providing personal information like their name, address, Social Security number, and date of birth.  The file freeze is immediate, and the length of the freeze is the option of the consumer.   The CRA then mails (10 days to 3 weeks) an envelope to the consumer containing a special personal identification number or PIN, and a dedicated toll-free number to call to lock/unlock the credit file.  A personal assistant or executor of an estate should consider locking down the decedent’s credit file upon death to reduce the chance of nefarious/illegal uses of that person’s identity. 

A national law, the Fair and Accurate Credit Transactions Act or FACT Act, allows each consumer to order a free copy of their credit files (Equifax, Experian & Trans Union) once each year by calling 1-877-322-8228).   A review of the active credit accounts of a decedent, including credit cards, is a good first step in determining if the estate has any outstanding credit accounts that need to be paid off. 

Another vulnerability of credit cards – CreditCards.com issues a warning

The new card skimming is called ‘shimming’

It targets EMV chip cards and is hard to detect, but remains rare

By

Remember the card skimming wave, in which fraudsters attach false fronts to outdoor ATM and gas pump point-of-sale terminals to harvest the details off your card’s magnetic stripe and clone your card?

The bad guys are back with a new, improved data pickpocketing technique called shimming, in which they secretly insert a shimmer, a paper-thin, card-size shim containing an embedded microchip and flash storage into the “dip and wait” card slot itself, where it resides unseen to intercept data off your credit or debit card’s EMV chip. Although the scammers can’t use that purloined chip data to clone an actual chip card (for reasons we’ll discuss shortly), they can clone a mag stripe version that’s fully capable of defrauding banks and merchants who may not be paying close attention to their card security protocols.

What makes shimmers potentially more effective that skimmers? They can easily be inserted into indoor, in-store POS terminals, where they record the data being shared between the card’s chip and the terminal. What’s more, when the scammers periodically collect the shim to harvest its bounty, they appear to be doing nothing more than paying at the terminal.

Both scams gained momentum domestically as the United States ramped up for what has turned out to be a slow, rocky and ongoing transition from mag stripe to chip cards, contributing to a record 15.4 million victims of U.S. identity fraud in 2016.

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