Visa: Avoid 'Negative Option' Credit Card Billing Scam

Credit card scamNearly a third of U.S. consumers have fallen for “negative option” scams – paying for shipping on a “free trial” or “sample,” and then unwittingly becoming victim to recurring credit card charges, according to Visa.
The deceptive marketing practice has become so pervasive that Visa has joined the Federal Trade Commission and Better Business Bureau in warning the public to be vigilant when signing up for an online offer promoting free trials or samples.
Here’s how “negative option” works:
A consumer accepts an online offer for a “free trial” or “sample,” then provides credit card information to pay for a small shipping charge. What they don’t realize is that there is a pre-checked box, normally near the bottom of a fine-print page, or buried under “Terms and Conditions,” that authorizes future charges.
Consumers are required to “un-click” or opt-out of a pre-checked terms and conditions or payment authorization box; or cancel before the trial period ends to avoid being billed on a recurring basis. 
“For free trials with a negative option feature, a company takes a consumer’s failure to cancel as permission to continue billing. Canceling can also be complicated by merchants with poor customer service, slow response times, and untimely refunds,” Visa says on its web page to inform consumers of the practice.
Here is Visa’s checklist of actions to help protect you from deceptive online marketing:

  1. Read and understand all terms and conditions. Exercise caution when a purchase involves a free trial.
  2. Pay particular attention to any pre-clicked boxes before submitting payment card information for an order. Failure to un-click boxes may bind the consumer to all of those terms and conditions.
  3. Try to resolve the situation with the merchant. If unsuccessful, contact the card issuer immediately to dispute the charge.
  4. Always review card statements on a regular basis for any unauthorized charges. Notify the card issuer promptly of any unusual activity or unauthorized charges.

One thought on “Visa: Avoid 'Negative Option' Credit Card Billing Scam

  • May 29, 2010 at 1:03 am

    In 2009, I subscribed to a press-reading service called NewsArchive, based in Iowa. I contracted for one year of their services, which ended in February of this year. On my most recent VISA statement, I discovered that this had been ‘renewed’ without my approval. Contacting NewsArchive, I was told that I had been sent an e-mail explaining the ‘automatic’ billing. They’ll be happy to refund part of the amount I never wanted to pay them.
    I guess these guys have never heard that ‘negative billing’ is illegal in Canada – it has been for about 15 years. And they’ve never heard of spam-filters either, apparently. Who do I contact to put these creeps out of business?

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