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Watch out for unexpected credit-card charges
How many times does a monthly charge appear on credit-card or debit-card statements without consumers realizing it?
Detroit Free Press
We've heard plenty about identity theft and the scam artists who buy stuff using your credit card.
But how many times does a monthly charge of $10 to $40 end up hitting credit-card or debit-card statements without consumers realizing it? It may be more times than you'd imagine.
Suzie Mitchell, 57, found a cute pair of earrings online for about $30 one day. But only months later, she realized she was charged about $90 — and ultimately could have paid $120, $150 or even more — for one little fashion treat.
How does that one work?
The West Bloomfield, Mich., woman ended up being billed nearly $30 each month for three months after she bought the earrings through JewelMint.com, a style site that has a monthly membership fee.
"I must not have read the fine print that said 'We're going to keep charging you,' " said Mitchell, who runs her own public-relations firm that focuses on marketing tech products to baby boomers.
Those charges would have kept going on — if she didn't catch the problem.
The JewelMint.com site notes: "If you do not select any jewelry that month and do not elect to skip the month, your credit card will be charged $29.99, and you will be given a credit to use for a future purchase."
Mitchell didn't really understand the program. She was alerted to the so-called "gray" charges after she signed up for a free consumer service called BillGuard.com.
She signed up for BillGuard when her son got a job there and encouraged her to try it out.
"It literally had red flags next to it," she said, referring to the alert.
Mitchell notified the online-jewelry company and later received a refund for two extra charges.
"I was shocked," Mitchell said.
Jeff Epstein is so busy starting a software company that he finds it tough to dig through the details on his credit-card statements each month. His wife works in sales and travels up to 100 days a year. They're both busy.
So he's not surprised he missed a recurring $10 charge for an airport Wi-Fi service he used only once.
"It was sneaking into my credit-card statement every month," said Epstein, CEO of a social-media software startup.
Epstein unknowingly spent $60 to $70 on airport Wi-Fi before he spotted the problem after using BillGuard.com.
The Federal Trade Commission (FTC) ordered almost $38 million in refunds about a year ago regarding bogus charges on phone bills.
The FTC sued Inc21, which placed unauthorized charges of $12.95 to $39.95 on monthly bills for thousands of small businesses and consumers.
James Kohm, associate director of the FTC's enforcement division, said consumers are increasingly complaining about what's known as negative-option marketing.
Consumers can be told they have received a free-trial offer, but are not informed or don't understand they're going to be charged continually if they don't cancel.
"The most important piece of advice is read your bills," Kohm said. And people need to read credit-card statements and checking-account statements, as well as phone bills.
Thousands of consumers are making regular payments as a result of rules buried deep in the fine print used by legitimate merchants, according to BillGuard CEO and co-founder Yaron Samid.
"It's a fine line. It's not fraud. That's why we call these gray charges," said Samid. About 350 sites are dinging credit cards here and there each month — without consumers realizing it, according to BillGuard's research.
The company, which receives revenue from banks, has access to complaint data from banks. It also gets data from its own consumers who might reply to an alert.
The service was launched last summer and expects to have more than 1 million users by the end of the year.
Legitimate merchants know most consumers don't read page 13 of the fine print that discusses a $5 monthly charge. And many consumers don't go over their credit-card statements item-by-item each month.
Some bad deals
• A consumer could get an email for a "free trial" product or self-help program. The sneaky part is that it will be up to the consumer to cancel future charges.
• A fashion-oriented shopper could sign up for a heavily promoted jewelry or clothing site. But many of these sites require you either to choose an item early in the month or tell the service by a set deadline that you're going to skip a month. If you don't follow the rules, you're charged around $30 or $40 a month. You might get credit for a future purchase.
Fighting mystery fees
• Beware of free-trial services. It can be tough to cancel monthly charges that result from a free trial. Some outfits are run overseas.
• Contact your credit-card company when you spot bad charges.
• Contact the Federal Trade Commission about fraudulent charges, identity theft and bad marketing practices at FTC.gov or 877-382-4357.
• If shopping online, read the frequently asked questions carefully to determine whether a membership fee is involved.
• Rules regarding monthly online memberships can be complicated.
Consider these rules at JewelMint.com: Your first credit-card purchase activates your preferred membership; however, you are not obligated to purchase each month.
Once your preferred membership is active, you have between the first and fifth of each month to select to skip the month.
You'd go to your account and click "Skip this month" within those first five days. If you do nothing, you will be charged $29.99 on the sixth of the month and receive a JewelMint credit.
This credit can be used to purchase any piece of jewelry from the site within the next 12 months.