Can credit cards protect you from online scams?

December 14 2009 by Ellen Roseman

Visa and MasterCard promise you zero liability from unauthorized transactions on your card, whether in stores, on the phone or online. Check what they say here and here.

However, the promise falls short when it comes to bogus online “free trials,” designed to trap you into making recurring monthly payments for cosmetics, drugs or vitamins.

Once you say yes to the trial, you will find yourself going back to your credit card issuer every month, trying to stop getting billed for shipments you didn’t think you had authorized.

Here’s the problem. The terms and conditions of the deal are buried in fine print on the website. You may not realize what you’re agreeing to, since you think you’re ordering only a few free products.

The credit card issuers, however, assume you’ve read all the “gotchas” and you’re going ahead anyway. They support the right of these companies to keep sending you unwanted stuff and keep billing you each month.

You think you’re in the driver’s seat with the zero liability guarantee. Instead, you spend hours on the phone trying to reverse the charges and worrying that the scammers will hunt you down and start billing you again after you get a new credit card.

Why don’t the credit card issuers stand up for consumers in these recurring billing frauds? Why do they hold you responsible for not seeing the zingers that are so well hidden to be virtually invisible?

If they blocked irresponsible companies from using their cards to bill you each month for free trial offers, then the promise would really mean something.

33 comments

  1. Jamie

    Dec 14 2009

    I have always considered myself a fairly smart consumer. However, I’ve been humbled recently.

    A quick summary of what happened:

    – A friend of mine on Facebook allegedly posted about a product she was happy with that she got for free (she did not, her account was hacked, but I didn’t know until later).

    – I went to the website, http://www.premiumwhitepro.com, and for $1.95, they would ship a trial tooth whitener.

    – I entered in all info, and processed the credit card, and $11.90 was reported as being charged to my card (no mention was made earlier).

    – As it was Sunday evening, I went on live chat within 10 minutes. She said the charge was due to international shipping.

    – Bad went to worse (I have a screenshot of the conversation), making it clear that I could be on the hook for at least the initial shipping (the trial) for $85, which is what it would cost for the product to be shipped to me automatically every month.

    – I asked to cancel, and finally when I threatened to call the credit card company, she gave me a confirmation number for cancellation, and reassured that there would be no charge.

    – The next day the shipper contacted me to confirm that they were shipping to my address, and I said they were not to ship, that I had a confirmation number.

    – I called the company, and they confirmed that they had not shipped, but could not refund the $11.90. They did offer to ship, and again I told them not to. When I said I had a record of the chat conversation that confirmed there would be no charges to my card, he hung up on me.

    Throughout this process, from immediately following the purchase/chat, I was in contact with the credit card (President’s Choice).

    They have been supportive throughout, but it is clear that they are not willing to do much.

    Through a few conversations with President’s Choice and a fax of the screen shot proof, the charge has been temporarily reversed, but I continue to monitor my statement.

    I have since cancelled that card and received a new one, hoping to stop any future charges. According to President’s Choice, it is possible that they could resubmit the charge, despite the new number, but not likely.

    Because President’s Choice has the proof, they will continue to go to ‘bat for me’ (not sure to what extent though). I can’t even imagine what I might have been on the hook for had I not had this screen shot proof.

    It is clear that the credit card issuers face a huge problem worldwide with this kind of fraud, but the burden of proof is clearly on the consumer.

    I don’t feel I was protected at all, and I don’t think that this is unique to President’s Choice. The added layer to this is the fraudulent use of my friend’s Facebook account.

    President’s Choice did make it clear to me that I was still responsible for the charge, due to the fact that I had agreed to the “terms and conditions” prior to completing the sale.

    It should be noted that the website had buried the terms and conditions at the bottom of their main page, in small grey discrete letters.

    I admit I had not checked it, nor had I seen it, and the company had not made it clear in the purchase process that I was agreeing to further charges prior to the sale (which I would expect from any honest merchant, and of course I would have cancelled prior had I checked or known what I was getting into).

    It should also be noted that I did receive the trial product on Dec. 4th. (According to the date stamp, it was sent out from Pickering, Ont. on Dec. 1st, well after all of my calls with the company).

    I called President’s Choice again, and they told me that because I had done all that I could do (called the company immediately, evidenced by the faxed screen shot), and had a new number, that chances were “good” that it would end here. He also told me not to send back the product, as the cancellation had occurred before they shipped it, and if I sent it back, I would have less to stand on to dispute.

  2. EF

    Dec 14 2009

    Read first line, small print.

    http://offers.motime.ca/sso/d/s.php?content_id=61031&community_id=22007749&id=12951056&wapdld=55446&media_type=audio&media_format=mobile_audio_ring_real&id_class=3&section=landingapi_landingapi_du1&&id_leaf=0005&track=969_30133_0&id_leaf=0005&ifrm=1&id_class=3&track=969_30133_0

  3. RL

    Dec 14 2009

    Hi Ellen, thank you for writing on this topic. I was unlucky enough to fall for one of these scams — not for teeth whitening, but for acai based diet-supplements.

    I applaud you for looking at the legitimacy that our credit card providers bestow on these companies, and I think there’s even a lot more that’s wrong with this than just that.

    Two of the main points that I would harp on are:

    1. the products rarely do what they are advertised as doing.

    And 2. once you are enrolled in a monthly shipping program, you are very often enrolled in a monthly-charge program with another company you have never heard of, and that doesn’t send you anything but a monthly charge on your credit card bill.

    The companies are also mostly entirely foreign owned, and the research that I’ve done suggests that almost all of the modern incarnations of these web-based scams tie back to a mail drop in Cyprus. (Re: Just Think Media and Farend Services Ltd.)

    Did you know there are also several attorney generals in the US that are trying to bring lawsuits against some of these companies as well?

    For instance:

    http://www.illinoisattorneygeneral.gov/pressroom/2009_08/20090819.html

    On top of all this, there are often shipping problems, it is made quite difficult to cancel, the “free 15-day trial” (where you receive nothing more than a package to return if you don’t want to be billed, and there is no use whatsoever) starts the moment you place your order, and that even once your credit card number is changed, you can still be billed, and your credit card company will look at these charges as valid unless you can prove that you’ve followed the proper return and cancellation procedures.

    I would very much like to see both government and credit card providers pushed to look at the issues of what constitutes genuine consent in a client-vendor relationship, and for there to be more transparency than is currently required, and that allows this seedy world of modern, flashy internet scam marketing to exist.

    Thank you very much for your column, and the work you do for consumers everywhere!

  4. BF

    Dec 14 2009

    They got me too. Please tell everyone to go here to lodge a complaint. Maybe if they get enough complaints, they will do something.

    https://complaint.ic3.gov/ctf.aspx

  5. JK

    Dec 14 2009

    I also went to this website to get a free sample of teeth brightener and was charged $11.90 on my credit card. I was upset as well since it was supposed to be a free offer.

    I went online today to check out my credit card statement and I noticed that I have 2 charges from the same company for approximately $95 each, a few weeks apart.

    So I went back onto the website and my husband said to go down to the bottom of the page and read the Terms and Conditions. I said to him why do I have to do that? I didn’t buy anything or sign anything.

    Lo and behold, right there in the conditions are the terms that by getting a free sample I have agreed to accept monthly products and have my credit card charged.

    Now, what sane person would agree to pay $95 per month for teeth whitening products when I can go to the dentist and have it done for cheaper than that?

    This is a total scam. I went on to their Chat Line today and spoke with a Representative and she cancelled my account because I explained it all to her.

    She said the next order had already been shipped and I told her that I hadn’t even received the first order that they charged me for. All I have received is the free (supposed to be free) sample on Friday, Dec 11. She said I would have to call back on Monday to speak to someone else.

    It also says in the agreement that if I return the product within 30 days of them shipping, then I would be credited for the cost with the exception of the delivery charges. How can I return something within 30 days when by the time I receive it I’m already well into the 30 days?

    The free sample I ordered on Nov. 9 was mailed on Nov. 25, according to the postage stamp, and I only got it on Dec. 11. The package was mailed from Pickering.

    Hopefully I will be credited for the 2 packages, but I will probably have to pay the $190 on my credit card and return the 2 samples if and when I get them and then wait for the company to credit my card back. That’s only if they get the product back within the 30 days, I am assuming. I did call MasterCard and had my card cancelled as well.

    Isn’t there something that can be done about online scams like this? Isn’t a free sample, just that, a free sample? Anyway, by bringing this to people’s attention, hopefully less people will get scammed.

  6. CA

    Dec 14 2009

    My wife also got burned from the same website.

    In less than 40 days, they charged her credit card with over $300. There should be something against false and misleading advertising.

    Also, I’m surprised that VISA continues to allow this merchant access to their network to continue ripping off unsuspecting consumers.

  7. Charles in Vancouver

    Dec 15 2009

    Ellen, I think this is also a good teaching moment for online scams in general. Any product or service that is advertised through hacking people’s accounts is going to be incredibly suspect.

    How do you know that someone’s had their account hacked on Facebook? In general, if someone uncharacteristically starts hawking an obscure product on their Facebook page, 9 times out of 10 it’s a scam. Moreover, clicking on the link may result in your own account being hacked.

    The best response to a mysterious commercial endorsement from a friend is:

    – On Facebook, contact them by commenting on their post – I usually say, “Was your account hacked? I suggest you change Facebook and email passwords immediately.”

    – If they don’t use Facebook often, or if the messages are coming via email, then write them at their primary email address. Alternately email someone close to them who is tech-savvy to point out your concern.

    – If it’s someone you know closely enough, phone them directly to let them know.

    If you hear back from your friend that, actually, they really are endorsing this product – and you know it’s absolutely the right person and not an imposter telling you that – then hey, by all means, go ahead.

  8. Bylo

    Dec 15 2009

    > Why don’t the credit card issuers stand up for consumers in these recurring billing frauds?

    Likewise, when you get a new credit card from the same issuer, why can’t they transfer all of your existing preauthorized regular debits, e.g. for utilities, gasoline keys, etc. by giving you the ability to approve such transfers on a merchant by merchant basis?

    When you lose a credit card, the least of your worries should be to figure out which merchants you have to notify of your new CC number.

    > If they blocked irresponsible companies from using their cards to bill you…

    That would also dramatically reduce the amount of SPAM we all get because the scammers would lose their means of collecting payment from the fools who respond.

  9. Geoff

    Dec 15 2009

    Ellen, are you kidding me? Why should VISA/MC eat the costs of consumers being stupid? I don’t read the fine print of a contract, so it’s somebody else’s fault? This is very different than someone stealing my card and buying stuff without my consent.

    I mean, c’mon people, accept some personal responsiblity. Take the above comment: ” I also went to this website to get a free sample of teeth brightener and was charged $11.90 on my credit card. I was upset as well since it was supposed to be a free offer.” Why wouldn’t the fact they were asking for a credit card number trigger some sort of alarm?

    Incidentally, cancelling a credit card does not mean that existing pre-authorized purchases don’t go through (otherwise everyone would order something in purchase installments, and cancel after the product was shipped).

    PT Barnum had it right. But he had no idea the suckers would get an advocate. Of course, if the credit card companies agreed to cover these risks, these are the same people that would complain when the card companies raise interest rates to cover their added exposure.

    Here’s a thought: Think before you act, and if you think something is too good to be true….

  10. Bylo

    Dec 15 2009

    > I mean, c’mon people, accept some personal responsiblity.

    They do. The problem isn’t the initial payment. The problem is in stopping the indefinite monthly charges that arise because the person didn’t read the fine print (a) because the vendor won’t stop making the charges and (b) because the credit card company won’t reject them at the customer’s request.

    > cancelling a credit card does not mean that existing pre-authorized purchases don’t go through

    You are mistaken. Some card companies, e.g. CIBC VISA, will even reject preauthorized charges when only the card expiry date has passed and the customer hasn’t notified the vendor of the new expiry date. Note that the credit card number hasn’t changed. If they can do that, then why can’t they reject preauthorized charges when the customer explicitly asks them?

  11. Geoff

    Dec 15 2009

    Bylo – you can’t say that people are accepting personal responsiblity in the same sentence that you say the person didn’t read the fine print. Accept the personal responsibility to read the fine print before you agree to a deal, or get a lawyer to read it for you.

    Also – I wonder what would happen if push came to shove on that dates issue. I wonder if it’s not a courtesy to ask the customer to provide the new date, or if it would get elevated to further action.

  12. Bylo

    Dec 15 2009

    > you can’t say that people are accepting personal responsiblity in the same sentence that you say the person didn’t read the fine print

    I can and I will. They’re not complaining about the initial charge that they agreed to. They’re taking responsibility for that. They’re complaining about
    (a) The subsequent monthly charges that they didn’t know about because they didn’t read the fine print. They should be responsible for the first payment, but not for any subsequent ones after they’ve asked the seller to stop.
    (b) That there’s no mechanism to get the credit card companies to reject debits after the customer has cancelled the service. (Contrast with pre-authorized debits where Canadian Payments Association members will intervene on your behalf.)

    Or is it your contention that the penalty for failing to read the fine print is a lifetime sentence to pay monthly fees for products/service you don’t want?

    > Also – I wonder what would happen if push came to shove on that dates issue.

    Speaking from personal experience, the onus is on the customer to notify anyone who makes pre-authorized charges on their credit card when the expiry date changes. That’s fairly easy to do with monthly debits like phone and CATV bills.

    It’s much more error prone if the arrangement is less frequent. You could end up with NSF-like charges when the credit card company rejects a charge simply because the merchant submitted a stale expiry date (even if it’s only a month or two old.)

  13. Geoff

    Dec 15 2009

    Or is it your contention that the penalty for failing to read the fine print is a lifetime sentence to pay monthly fees for products/service you don’t want?

    It’s simply my contention that MC or VISA have nothing to do with the cancellation/refund of this order.

    Ellen – my question is why would anyone buy from this site? It baffles me. If a company makes its policies hard for me to understand, I won’t buy from them. That’s capitalism. I’m also not saying that they aren’t being deceptive, simply that it’s not VISA/MC’s fault. It’s the deceptive companies, not their suppliers. Should hydro no longer let use their services either and turn the lights off?

    Lastly, I think it’s up to the person who decides. Nothing is free, right? Here’s a story about the toronto star’s free newspaper offer that might not be so free

    http://blog.onthree.ca/2009/09/14/how-the-toronto-star-lost-my-business-for-good-and-what-economic-development-marketers-can-learn-from-it/

  14. Geoff

    Dec 16 2009

    You know I’d comment again but my most recent post was posted and then deleted without comment. The irony of a customer advocate employing censorship because I included a link to a story (not my story) about how the Toronto Star advertises “free” newspapers and then bills for them.

    So to everyone here: Companies are all bad, big companies are even bigger, you have no obligations to read the details of any contract you sign, and it’s always someone else’s fault no matter what. Peace.

  15. Ellen Roseman

    Dec 16 2009

    No censorship, Geoff, and I liked your story about the Toronto Star’s marketing practices.

    Just a delay in moderating your earlier post because of writing deadlines and holiday parties.

  16. Geoff

    Dec 16 2009

    My apologies.

    (And I do think having a customer advocate is a good thing, just that it’s not always true that the customer is always right.)

  17. Bylo

    Dec 16 2009

    > It’s simply my contention that MC or VISA have nothing to do with the cancellation/refund of this order.

    But they do in certain cases, e.g.
    http://usa.visa.com/merchants/operations/chargebacks_dispute_resolution/index.html,
    Chargebacks & Dispute Resolution.

    Why should these “free trials” that result in perpetual subscriptions be excluded?

    Again, even if someone takes responsibility for not reading or appreciating the fine print by accepting the first couple of payments, how are they supposed to stop subsequent ones if the credit card companies won’t cooperate?

    As for the Toronto Star, the paper needs to revisit its marketing practices. Considering that the paper publishes numerous articles about the ineffectiveness of the federal do-not-call list and also promotes the CMA’s similar list, it’s odd that it excludes itself from the former (because it’s a newspaper) as well as from the latter (because it’s not a CMA member.)

  18. Falo

    Dec 16 2009

    Credit card companies make a TON of profit from their customers, so I dont’t see why a little protection should be out of the question

  19. Cynthia

    Dec 19 2009

    I think the biggest thing people should realize, and this should be a huge red flag, is if you are signing up for a free sample and they want credit card info, or your cell #, it’s not a freebie at that point.

    I get many freebies in the mail and never had to disclose my cc# or my cell # to get them.

  20. Bylo

    Dec 20 2009

    Visa cuts off 100 merchants for scamming consumers

    Visa Inc. has cut off 100 scammers who use bogus marketing techniques to dupe consumers in the past six months.

    Among the most common hustles: billing the credit cards of customers who thought they were getting free trial products like dietary supplements or teeth whiteners $79.95 per month or more, and then making them jump through hurdles to get the charges to stop.

    “We’ve been monitoring this situation from this past summer in particular,” said William M. Sheedy, a Visa group president. The number of complaints from cardholders who disputed ongoing charges they never agreed to shot up, although the merchants and the products they sold often varied.

    While there are always a handful of complaints about merchants, most are resolved quickly. But in the case of the ongoing charges, it was clear the problem was widespread. “Consumers are being fleeced,” Sheedy said…

  21. Ron Wilson

    Dec 25 2009

    I had a problem with vitamins and it is very similar to all the aforementioned stories.

    I contacted Visa and they were very cooperative, initiating three-way conversations with the suppliers and us.

    I also had email verifications from the vendors that they would stop the monthly shipments and credit us, which they didn’t do.

    Visa opened files with us, gave the vendors 4 weeks to issiue the credits and, when they didn’t, Visa charged them back and credited us back.

    It was a summer-long ordeal with an inch thick pile of papers, but I do thank Visa for their guidance and eventual restitution. They were very helpful.

  22. Greg

    Jan 12 2010

    Many thanks for the useful information, well done. http://credit-card.creditcards-and-loans.com/how_to_spot_scams_with_personal_credit_cards.html

  23. LR

    Mar 10 2010

    There is an onus on consumers to follow the “buyer beware” policy when purchasing online. When you accept a contract with a merchant, whether it is for a free trial or not, you must ALWAYS read the fine print.

    I’m sure we have all heard that old saying “nothing in life is ever free” and if you accept, you are in essence responsible for it.

    Visa and Mastercard, despite their inability to assist in most cases (due to laws put in place by our government that allow for these practices), do take action on complaints registered by consumers. So follow the links above in Ellen’s article to the Visa and Mastercard website and they do whatever they can within the scope of the law to assist consumers.

    See the article below:

    http://credit.about.com/b/2009/12/18/visa-cuts-off-100-merchants-for-the-negative-option-scam.htm

    Until the government takes action to change the laws for negative option and deceptive marketing billing practices ultimately it’s up to us as consumers to protect ourselves by reading that fine print and asking questions before clicking on Agree or signing that contract so we are fully educated and know what we are getting ourselves into.

    Don’t be so quick to blame Visa and Mastercard for this issue; Visa and Mastercard are methods of payment only, and they do their best to protect consumers where they can within the law, but unless the government makes required changes we are left to our own defenses and must do everything in our power to protect ourselves.

    It’s time to stop blaming the credit card companies and start looking to our elected government to enact laws that better protect consumers. After all, we elected them to protect us, so why aren’t they doing it?

  24. CW

    Mar 29 2010

    We can’t rely on the credit card companies and don’t count on the zero liability! We need to check our accounts everyday, check the transactions and the credit limit available.

    One day, I noticed my the credit limit available in my Citibank Mastercard fell by almost $5,000. I quickly called Citibank.

    After speaking to a few reps, I found out that someone had tried to charge a Sears mail order for about $5,000 to my account. The computer system didn’t allow the transaction and a person called Citibank to get a manual override.

    Without calling me to confirm the transaction for such a big amount, someone at Citibank approved the transaction. I could not believe they would allow such a large mail order going through a customer account so easily. Luckily, I found out quickly enough.

    Don’t trust the marketing about zero liability. We customers are always the ones spending hours and hours to resolve all these scams and careless mistakes at the credit card company.

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