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Why you may be getting charged for products or services you didn’t sign up for

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The following is a news release from the Better Business Bureau.

IDAHO FALLS – Whether you’re trying out the newest make-up box subscription or having healthy meals shipped right to you, you might want to be weary what is coming out of your account. The Better Business Bureau receives thousands of complaints each year alleging that customers are auto-billed for a product or service that they never wanted or realized they signed-up to receive. In fact, anyone that makes purchases online is vulnerable. This is why it is so important to read the fine print.

When customers buy something with continuing service or regular product shipments, they are typically asked to “opt-in” to auto billing. If customers are asked to “opt-out” of continued service or additional product purchases, it is called a negative option sale.

If you haven’t heard the term “negative option” before, you’re not alone. This sales tactic is called a “negative” option because, unless you specifically opt-out of the additional purchase, the seller automatically takes your lack of a response to mean that you want to keep buying their product or some additional service, sometimes indefinitely. Consumers have unknowingly made these payments for months or years at a time, and lost hundreds or thousands of dollars.

According to the Federal Trade Commission, there are different types of negative options. First, you have the automatic renewal, which is the default setting to renew the subscription at the end of each billing period, unless consumers specify not to renew. Then you have the continuity of service which is where consumers will continuously be billed for and receive products until they opt-out of the program. The free-to-pay conversion can really lure people in. The product is free for a limited time, then the business will begin to auto bill your account until you opt-out of the program.

RELATED TOPIC: SHOPPING ONLINE SAFELY

This podcast was first published in 2018

Businesses have been fined millions of dollars by the FTC for these potentially deceptive advertising practices.

“A disclosure that is buried in a long paragraph of unrelated text will not be effective. Even though the unrelated information may be useful, advertisers must ensure that the disclosure is communicated effectively,” according to the FTC.

Additionally, the “Restore Online Shopper’s Confidence Act” (ROSCA), lays out new laws that actually make these types of sales illegal unless certain disclosures are met.

According to a recent blog posted by the FTC, businesses must clearly and conspicuously disclose any terms or conditions before they take billing information. Businesses must also receive customers’ implicit consent before auto-billing their account. And, there must be simple methods by which consumers can opt-out of continued charges.

The BBB Code of Advertising states that “an advertisement may be misleading although every sentence separately considered is literally true. Misrepresentation may result not only from direct statements but by omitting or obscuring a material fact.”

BBB offers the following tips:

  • Be sure you fully understand the terms and conditions before you buy.
  • Remember to cancel on time, so you won’t be auto-billed if it is a “free trial” offer.
  • Watch out for any pre-checked boxes that appear when you make your online purchase. Many times, these will already be checked or selected, and you must un-check them to opt-out.
  • Check your credit card and bank statements for any unauthorized or reoccurring transactions.

Contact your BBB for assistance or file a complaint if you think you’ve encountered a negative option sale with inadequate disclosures.

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