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Beware the 'Free Trial Offer' Trap

 
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March 12, 2013

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It sounds like a great deal: Just type in your credit card number, and you get to try out a subscription to a major newspaper, a bottle of diet pills, acne cream or some other product — for free.

But experts say these ubiquitous free trial offers often come at a price: You may get charged because you forgot to cancel successive deliveries in time or open yourself up to fraudulent charges.

“Any time you have to give a company your credit card or debit card number in order to receive a free anything, it's probably not going to be free,” says Mark Huffman, a reporter for ConsumerAffairs.com.

That was the case for Susan Hawkins, a copywriter in Atlanta who saw a TV ad  offering a “risk-free trial” of a product called Hydrolyze that claims to erase dark circles under the eyes.

“Much to my husband's dismay, I fell for it,” Hawkins says.

She called, got an automated recording and entered her credit card number.

“The next thing we know, I'm signed up and we get billed for $67,” she says, adding that she filed a dispute with her credit card company and got the charge removed.

According to the terms and conditions of the Hydrolyze offer, the consumer pays $1.99 for shipping and gets two jars of the cream. During the 30-day trial period, they can call customer service, get a return number and send back the jars within two weeks to avoid getting charged. Otherwise, they'll be enrolled and begin receiving a shipment of the product every two months until they cancel.

“Believe me when I tell you — I learned my lesson,” Hawkins says.

What's the catch?
Consumer advocates say they regularly get complaints from consumers like Hawkins who sign up for a free trial offer requiring  a credit card number and end up paying a price. Free trial offers can be a problem even when they come from well-known, legitimate companies, experts say.

That's because these offers are based on the premise that a consumer must remember to cancel within a certain time period or automatically get signed up for — and charged for — a product or service.

“What you're agreeing to in fine print is, 'If I don't tell you I don't want this product in, say, seven days, I'm giving you permission to sell it to me,'” Huffman says. “It's called the negative option.”

In a nutshell: You have to opt out if you don't want the product rather than opting in if you do want it.

In the past, Huffman says, it was more common to see free trial offers that were out-and-out scams, where a shady company would make an offer just to obtain card numbers.

“Sometimes they wouldn't even send a free sample — they'd just take the credit card and put charges on it,” Huffman says, noting that that's less common now, and the Federal Trade Commission has shut down several of those types of companies. But it does still happen.

For example, the FTC in 2012 stopped an internet marketer who allegedly scammed consumers out of $359 million with “free” trial offers for credit reports, teeth whiteners, supplements, weight loss pills and a work-at-home job service.

“The FTC has done a pretty good job cracking down on the scams,” Huffman says.

Even free trial offers from reputable companies can be fraught with problems, though. Consumers can forget to cancel in time or just procrastinate.

“Companies are counting on people saying, 'Oh, what the heck,' and letting it go two or three months,” Huffman says. “That way, they've gotten a few months' worth [of fees] out of you.”

Even when consumers do cancel in time, charges can appear anyway. “The fallback for the company is always, 'Oh, we made a mistake,'” Huffman says.

Be smart about free trial offers
If you decide you do want to take a chance on a free trial offer, here's how to decrease the risk:

1) Do your research. Before you hand over your credit card number, check out the company. Check its rating with the Better Business Bureau and do an online search to see what other consumers are saying. Sites like PissedConsumer.com are full of complaints about free trials for products ranging from e-cigarettes to acai berry supplements.

“If you see a large number of complaints, it could be a red flag,” says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League.

2)  Guard your private information. If a company asks for your Social Security number or other personal data, do not provide it and walk away from the transaction.

“The worst-case scenario is you think you're signing up for a free trial offer but you're really signing up for ID theft,” Breyault says.

3) Read the fine print. Rather than just reading the sales pitch, look for the full terms and conditions of the offer and read them. Find out exactly what you need to do and when you need to do it, if you don't want to get billed, Breyault says. Also find out how much the product would cost if you were to get charged.

“The amount could be anywhere from a few dollars to hundreds of dollars,” Breyault says.

4) Use credit rather than debit. If you are going to hand over a card number, credit probably is preferable to debit, Breyault says. That way, if the company makes unauthorized charges, the money isn't coming straight out of your bank account. Also, consumers generally have more rights with credit cards, including more time to dispute an unauthorized charge.

5) Set up a reminder. It's a good idea to make a note on your calendar or set up an alert to remind you several days before the free trial period is set to expire, Breyault says. That way, if you want to cancel, you have time to do so before getting charged.

6) Get it in writing. If you cancel, you should receive a cancellation number and make sure you will get a cancellation email.

“You want to get it in writing so you have hard proof,” Huffman says.

7) Check your credit card statement. If you take a free trial offer and then cancel, make sure to scan your credit or debit card statements carefully for charges for several months afterward. That's because it's fairly common for charges to “mistakenly” show up on your bill, Huffman says.

And, finally, if you do get treated unfairly by a company, consider complaining to the Better Business Bureau and consumer advocacy groups, experts say.

“Don't stand by and just take it,” Breyault says.


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