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Same Old Scam, Every Month
Credit Card Charges for Purchases You Don't Remember

By Don Oldenburg
Washington Post Staff Writer
Sunday, May 7, 2006

Your first clue something's wrong is when you notice a random charge on your monthly credit card statement, maybe as little as $9.95, paid to a company whose name draws a blank.

That's followed by confusion because you have no recollection of buying anything from any such company. And, then, anger wells into consumer outrage when you discover that you hadn't noticed the same stinkin' $9.95 charge from the same suspect company on your statement the month before, and the month before that, and . . . well, you get the idea.

"I was asleep at the switch, so I've got to shoulder some of the blame . . . but I think this might be a scam," says Ben Beach, an editor at the District-based Wilderness Society, who last September noticed just such a $9.95 charge on his Visa statement from AP9 Connections. The charge began seven months earlier. He has no idea how the company got his credit card number.

Beach called the company's toll-free number on the statement, and a customer-service rep told him his wife "had signed up for this discount travel service while on [the travel Web site] Orbitz," he says, insisting that his wife never clicks "yes" on those annoying pop-up ads.

"She has no recollection of this whatsoever," he says.

F. Barbante of Fairfax says he found a similar charge on his Visa Platinum card last February and was stunned to find out it had been going on for two years and totaled $406.

"My wife thought the charges were mine, and I thought they were hers," he says of the charges -- $14.95 for each of seven months to MWI Homeworks Plus and $18.95 a month to AP9 Homeworks Plus thereafter. Both are buying clubs owned by Vertrue Inc., a Connecticut member-services marketing company.

Barbante searched online and found an overwhelming number of complaints against AP9 companies, most with problems like his. He called its customer-service number and was told he had agreed over the phone to receive a $50 savings bond and a trial membership in the buyers club, which markets home, yard and family products. He recalls the telemarketing call but distinctly remembers declining the offer. The customer-service rep said he could not get a refund.

The sales technique is called a "negative-option plan," one of those shady but legal deals in which consumers are automatically charged for services or products until they take action to say they don't want them. The most common consumer complaint -- aside from alleged unauthorized automatic billing -- is the way, critics say, that the marketing companies play loose with the truth to enroll unsuspecting consumers.

Companies that use negative-option sales typically defend their business practices by claiming that consumers simply don't recall signing up or saying that someone in the household must have clicked "yes" to accept an Internet pop-up ad's offer. Oh, and the companies say they have tried their best to prevent their confirmation e-mails from ending up lost in customers' spam filters.

It's "a bizarre possible scam," says Rita Zeidner, an Arlington writer who in January noticed a $10 charge from WLI Reservation Rewards that had begun the month before.

When she called the customer-service rep, she got a recording asking her to enter a credit card or membership number. "I don't feel comfortable giving these folks my credit card info to cancel my membership, but then again, they already have it," says Zeidner, who doesn't recall receiving any membership information.

Zeidner's credit card company was willing to investigate the two months of disputed charges but could not assure her that filing a dispute would cancel the WLI membership or stop the monthly charges. "It occurred to me that I may not have any way to get the scammers to stop billing me," she says.

Jim Hood, founder and editor of Consumeraffairs.com, a consumer news and advocacy Web site, has heard the story often. "Whether you're buying a push-up bra from Victoria's Secret, a membership in Classmates.com, a ticket to Rome or one of those impossible-to-shake AOL subscriptions, [these kinds of offers] are lying in wait," he says. "These negative-option shakedowns are the modern equivalent of the pickpockets that once infested major cities."

Although a few state attorneys general (Minnesota, New York, Nebraska, California and Florida) have "administered a sharp slap on the wrist" to MemberWorks (renamed Vertrue in 2004), Hood says "the prevailing legal opinion seems to be that these schemes are operating within the law -- which says something about the state of consumer-protection laws in our country today."

So does the amazing number of consumer complaints. The Better Business Bureau, for instance, has 2,218 complaints against AP9 buyer clubs. Ed Magedson, founder of Rip-offReport.com, a consumer complaint and advocacy site, says he has received more than 2,400 e-mail complaints about AP9 clubs and 4,758 e-mail complaints about WLI Reservation Rewards.

"They do it to millions of customers, and you're talking millions of dollars, and they know exactly how to stay under the radar," says Magedson. "For every person who has a complaint, there are hundreds of other victims out there."

Richard Fernandes is chief executive and founding partner of WebLoyalty.com (WLI), the Norwalk, Conn., member-services marketing company that has partnered with 110 companies to make its offers through their Web sites. Last year, WebLoyalty's revenue exceeded $108 million.

He says most of the complaints against his company are several years old and that WebLoyalty.com has corrected its businesses practices that caused problems.

Now, he says, WebLoyalty.com makes the terms of membership clear and sends five e-mails over 30 days to new members to make sure they understand what they're getting into. "I think somebody's got to make a decision to join this. You have to put in your e-mail address twice and click 'yes,' and there is a box with our terms and conditions," he says.

But what about Rita Zeidner?

"She may have forgotten, and that's why we try, at the end of the day, to make it easy to cancel," says Fernandes, who produced a print-out labeled as Zeidner's "customer history" that detailed each transaction, from her agreeing to a 30-day trial membership in exchange for a $10 cash-back award to each of the e-mails confirming and reminding her of her membership.

"What we found in a lot of these cases is that the person knows when they joined, but a month or two later, they've forgotten," says Fernandes, who canceled Zeidner's membership. He adds that if she had stayed on the customer-service line longer, a human would have picked up and helped cancel her membership. "We are not in the business of convincing consumers to keep a service they don't want. They can get a refund," he says.

Zeidner concedes she has clicked on "get cash back" offers. "I don't know if this is the case here," she says, adding that she does not recall using a WLI $10 coupon or getting all those e-mails. "But yeah, I've played the fool. . . . Obviously, these guys are way smarter than I am."

Adaptive Marketing LLC, Vertrue's management and marketing arm, promotes a no-questions-asked, full-refund policy on its Web site, but the policy apparently doesn't extend throughout its negative-option empire that, according to a Vertrue financial report last month, is expected to bring in $650 million in revenue in 2006.

"I had to make three calls to drop this 'service,' " says Beach, adding that none of the customer-service reps offered to refund his money. Finally, a supervisor agreed to refund "a month or two" of the payments and to cancel the account, he says.

Barbante says a week of persistent calling to AP9 Homeworks Plus finally paid off in a full refund, given reluctantly.

Contacted several times for this column, Vertrue did not return calls.

So how do consumers protect themselves? Besides not agreeing to unsolicited deals online or filling out online surveys that pop up, Magedson warns against clicking anywhere -- not just on the "yes" icon -- on Internet pop-up ads. As soon as you do, he says, these buyer clubs are able to get your credit card info by tracking the transaction on the host site.

"You never even want to click the X in the corner if you are suspicious of a pop-up," he says, explaining that some dishonest advertisers "crosswire" pop-ups so that clicking the X is the same as clicking "yes." "Instead," he says, "press the ctrl-alt-del buttons, and when the task bar manager comes up, press 'end task' for the title of that pop-up."

Adds Edward Johnson, president of the Greater Washington Area Better Business Bureau: "A negative-option offer that is attached to a free trial period inherently lends itself to potential problems -- like people not understanding that they signed up and the debits made to your account."

He recommends consumer vigilance. "A careful review of your credit card statement every month should be the rule -- not the exception," he says. "That is crucial. The bottom line is that free trial offers can come with a significant cost, and for many consumers, there is nothing free about it."

Got questions or comments? A consumer complaint? A helpful tip? E-mail details toconsumer@washpost.comor write to Don Oldenburg, The Washington Post, 1150 15th St. NW, Washington, D.C. 20071. Because of the volume of mail, personal replies are not always possible.

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