[ALERT] Beware The Recurring Charge Scam

Category: Shopping

A college freshman bought some lingerie on an ecommerce site called “Adore Me.” Several months later, her debit card was declined at a brick-and-mortar store; she was overdrawn. When she reviewed her bank’s records, she discovered monthly charges of $39.95 from “Adore Me” which she did not recall authorizing. That was just the beginning of this outrageous scam. Here's what holiday shoppers need to know about this and other recurring credit card charge scams...

Holiday Shoppers, Beware of Recurring Charges

The young woman had received only the one order from the company, and nothing in exchange for those $39.95 charges. Despite Mom’s assistance, they were unable to stop the recurring charges. “Adore Me” insisted she had agreed to a “subscription” in which she accumulated “points” that she could spend on the site. The scammers pointed to a checkbox and fine print at the bottom of their checkout page that said, in effect, “By placing one order you agree to pay us $39.95 each month, indefinitely.” The box was checked by default.

Multiple attempts to cancel this bogus “subscription” (Who subscribes to underwear?) were either ignored or falsely promised to be honored. Finally, after months of torture, “Adore Me” refunded the monthly charges. Yes, she could have handled the situation differently; I would have reported my card stolen and gotten a new card number, simultaneously disputing the unauthorized monthly charges. But obviously, “Adore Me” is running a scam, and it is not alone.

This “recurring charges” scam is echoed in the software industry; ironically, it is common among online service providers and security software developers who purport to protect us from scammers. But lately, it has become more prevalent in e-commerce applications such as “Adore Me.”

IMG

Subscription ecommerce is a booming segment of the booming ecommerce market. “The largest such retailers generated more than $2.6 billion in sales in 2016, up from a mere $57.0 million in 2011,” according to a McKinsey research report published in February, 2018. The subscription model has been applied to a broad range of products “in a wide range of categories, including beer and wine, child and baby items, contact lenses, cosmetics, feminine products, meal kits, pet food, razors, underwear, women’s and men’s apparel, video games, and vitamins,” says the report.

Busy, convenience-driven consumers subscribe readily; about 15% of online shoppers subscribe to one or more products, says McKinsey. The business model is popular with consumer products makers ranging from start-ups like Blue Apron to venerable giants like P&G and Walmart. There is nothing inherently wrong with subscriptions when they are entered into voluntarily by fully informed consumers. But it’s apparent that “Adore Me” and other online stores are perverting the subscription model.

"Gotcha" As a Business Model

The recurring charge scam is just one of many ways that consumers are impacted by fraud. The FTC report Protecting Older Consumers 2017-2018 goes into fascinating detail on the various types of consumer fraud, the methods used, which age groups are most impacted, and how much money is lost.

Many others have had a similar unpleasant experience with Fabletics, a clothing merchant. If you're not very careful, making a purchase will opt you in to a "VIP membership" which gives Fabletics permission to ding your credit card for $49.95 every month, unless you remember to log in before the 5th of the month to "skip the month." How many pairs of leggings do you need? Those funds do accrue in your Fabletics account, but it's not easy to spend your credits, and even harder to cancel the subscription.

Many companies that profit from these recurring automatic monthly charges have specially trained "customer retention specialists" that will bargain - and even argue - with upset customers to retain them as paying members. If you've ever tried to cancel a subscription-based service, you know how maddening it can be to speak with these agents. It's almost as if these companies derive pleasure from misleading and angering their customers.

The Federal Trade Commission has settled fraud cases against 12 subscription-based companies, assessing fines of over $400 million. "It's an area that's rife with problems right now," James Kohm, assistant director of enforcement at the FTC's Bureau of Consumer Protection, told CNBC in a recent interview.

Adore Me was one of those targeted by the FTC, and ordered to pay a $1.3 million fine for misleading customers. eHarmony, a popular online dating service was fined over $2 million for allegedly deceptive renewal practices. And Apple topped the list with a $16 million settlement, after FTC claims that they were charging unsuspecting customers for in-app purchases.

So do not shop too fast this holiday season, or ever. Take time to read the boilerplate and fine print on every page an ecommerce site from login to checkout. Uncheck any boxes you don’t want checked. If you notice that a site tried to pull a fast one, don’t submit your order; go somewhere else.

And finally, do keep a close eye on your credit card statement. If you see unexpected charges, contact the merchant right away. If they won't resolve the problem immediately, tell the rep that your next two phone calls will be to your bank, and your state Attorney General's office of consumer fraud.

Have you been scammed by an online merchant? Your thoughts on this topic are welcome. Post your comment or question below...

 
Ask Your Computer or Internet Question

  (Enter your question in the box above.)

It's Guaranteed to Make You Smarter...

AskBob Updates: Boost your Internet IQ & solve computer problems.
Get your FREE Subscription!


Email:

Check out other articles in this category:



Link to this article from your site or blog. Just copy and paste from this box:

This article was posted by on 23 Nov 2018


For Fun: Buy Bob a Snickers.

Prev Article:
Geekly Update - 21 November 2018

The Top Twenty
Next Article:
[CYBER MONDAY] Geekly Holiday Gifts

Most recent comments on "[ALERT] Beware The Recurring Charge Scam"

(See all 34 comments for this article.)

Posted by:

Bob Ames
23 Nov 2018

I searched around and chose a bank that offers no minimum balance or service charges and includes a debit card. I normally keep about $10 in it and if I am the least bit suspicious about who I am doing business I'll add just enough to cover the current charge and give them that number. If they try to charge me again there will be nothing to take.


Posted by:

jphuf
23 Nov 2018

It is not only the online sellers that perform scams, also "legitimate" brick & mortar stores. Where I worked as a PM, by reviewing purchases on my jobs, accidentally found out that the company bookkeeper was paying every monthly invoices for the same items that were paid months prior. These places found a cash cow. I initiated a purchase order procedure system to end that practice. The bookkeeper was fired after being forced to repay the company. We also initiated criminal proceedings against those suppliers.


Posted by:

Daniel Wiener
23 Nov 2018

I've been very happy with the banks which issue my credit cards (especially Citi and BofA). They warn me if their computers notice an unusual transaction, in case it may be fraudulent. I also carefully review my credit card charges, and if one seems bogus I open up a dispute. The bank will immediately credit me with the disputed amount pending a resolution of the dispute. I also carefully check the fine print to prevent the kind of recurring charges being warned against. All of this has been pretty effective. I don't worry too much about being scammed, because the banks seem to be on my side and will quickly fix any problems which arise.


Posted by:

11bravo
23 Nov 2018

Bank of America offers ShopSafe, a virtual credit card where you supply amount and end date for single purchases. Protects against repeating charges AND company hacks as the card can be set for a single purchase only. Good for buying from unknown companies and from known companies infrequently.


Posted by:

Dan
23 Nov 2018

Looks like Quicken may be headed this way as well. In the past I acquired a physical disk of software in a package (useful for only three years, but that's another complaint). Now every time I use my 2016 Quicken I get nagged to renew online (Software-as-a-Service) for a "recurring" annual fee on my CC.

Not playing their game. I understand why they are doing it - greater revenue stream, more leverage over their victims (er, clients) - but I don't trust them with open access to my CC. I will find a way to renew for next year only, and then change over to one of the open-source Linux "clones" for keeping my (fairly simple) finances.


Posted by:

Elinor
23 Nov 2018

Sad to say Act Blue does this also. They automatically check make it monthly donation box; to avoid recurring charge, you have to uncheck it. If I give money to a political candidate or cause, I want it to be one time only by default. This really angers me. This is supposedly a legitimate enterprise.


Posted by:

Brian B
24 Nov 2018

My answer to this kind of scam, is to use a pre loaded Mastercard. If I want use it to purchase from an unfamiliar vendor, I just go on line, and load up the card from my bank account, with just the correct amount, and then use that card to pay online or over the counter. That way the balance is always at, or near zero. If any one (including myself) tries to debit the card, the transaction is just declined. It gives me a lovely feeling when I receive an email from some firm telling me my subscription charge, which was never authorised by me, has been declined.

To my knowledge, this has saved me on three occasions.


Posted by:

Dave M
24 Nov 2018

I found one of these recurring charges on one of my credit cards awhile back. I called the company and they insisted that I had approved the charge. I didn't argue; simply hung up and then immediately called my credit card issuer. They promptly removed the 2 months of charges, cancelled the card and sent me a new one. Yes, I should have caught the bogus charge the first month - don't know why I didn't because I always check my card bills. But the bank was most cooperative and helpful. Only drawback: I was without the credit card for about a week until the new one arrived.


Posted by:

Cat R
24 Nov 2018

I remember one time my B/F ordered something, i checked the bank and asked him what 800 bucks was doing out of acct, due to it being in RED. He said i don't know, i said you ordered something, he said a free catalog. He called the company and found out with catalog he also bought a car, well made trip to bank and let them know what happened. Thank goodness the bank blocked the 800 bucks. Nightmare, because those people kept calling his number. Not the first scam on him, the latest one, he contact a agency and they went to that address and 3 people arrested for scamming.


Posted by:

Jay R
24 Nov 2018

Many thanx to Cold City and Brian B. I must speak with my bank next week.


Posted by:

Mark Tonyan
24 Nov 2018

Good article. I got burned on iDrive. The auto-renew button was below the page break. I missed it and got burned for $50, for a second year, when I didn't even know I'd paid for it.


Posted by:

Joel Bergmann
25 Nov 2018

This happened to me with . I found the site, ordered some postage, paid for it, and then found that I was being billed an annual membership fee. I never even saw a check box which would have made it possible to opt-out in the first place! And believe me - I looked!
It took months, until I was fortunate enough to get The United States Postal Service involved, since they agreed it was a sneaky scam, and told Stamps.com that they would not permit their "postage" to be used under those circumstances! Stamps.com backed down, and returned fees that had been auto-billed, which I had not caught!!


Posted by:

Steve
25 Nov 2018

My credit card company has available "virtual" numbers to use online or with telephone orders. With the virtual number I can specify the amount of the transaction and for how long the virtual number will be valid. If someone steals the number, it cannot be used at another merchant and is valid only for the amount specified, which has already been used. If the merchant tries to get cute with recurring charges, it will be rejected as the number is good only for the amount and time limit (2-12 months) that I have specified.


Posted by:

Ed Brown
25 Nov 2018

This scam happened to us last year. It was a cosmetic which Vana White was going to be selling because she was quitting the WHEEL TV show. The back page of the paperwork accompanying the small cosmetic sample had us agreeing to a subscription to a monthly jar of this cosmetic cream and a membership in a sort of club for more. It was a California-based outfit. We got the set-up cancelled and replaced our Credit Card to eliminate all future charges from this firm or their associates.


Posted by:

cal67
25 Nov 2018

Autodesk is among the software companies that has changed from "purchase" to subscription. Our CMM at work uses software from a company that was purchased by Autodesk. I had paid a (substantial) amount to purchase the software and then we paid an annual software support fee that allowed updates, provided technical support, etc. Autodesk bought the company, and even though we had purchased the software, it is now switched to a subscription model. We received no credit for the initial purchase, and the annual subscription fee is 5 times the previous support fee. If we don't pay the subscription fee, the software stops working.


Posted by:

Gary
26 Nov 2018

www.freeshipping.com is another one of those sites. You earn money back on your purchases, and you also get free shipping from numerous companies. However, if you fail to read the "small print" otherwise known as the terms and conditions, you'll find a $12.95 charge on your credit every a month. Unless you read the T&C's, there's nothing on the site to indicate you will are joining a monthly subscription service.


Posted by:

Bob
26 Nov 2018

I got burned by IDrive, like Mark Tonyan. I canceled my free account before the deadline, but still got charged. I called the company and the CD rep told me that I had two accounts and the second one was definitely not free. I did not agree to the second account.
I tried the device as soon as it arrived and I couldn't get it to work on my two-drive system. So I got nothing for free but a paid account. I no longer trust the expert who recommended IDrive.


Posted by:

Alasdair
26 Nov 2018

Dear Bob,
Thanks for a timely (Christmas shopping) reminder of this scam. I was caught when I sent away for a free gift. The company tried to take money from my credit card even after I had unchecked the subscription box.
Luckily, I was online with my bank as the payment pending notification came in, so I was able to contact my bank and stop the payment. It still required them to send me out a new card, though.
I went back to the free gift site and noticed that every item on it, from electrical goods to cosmetics, were all running the same scam. Even though they were from different companies.


Posted by:

Beverly
26 Nov 2018

Amazon is famous for charging monthly fees for something you didn't ask for. I got a notice from Amazon about 6 months ago that I was eligible for "Kids Unlimited" free for 6 months for Prime members. I did not sign up for this service. In fact I checked a couple of times to make sure I wasn't signed up for it. However, last month I noticed I had a charge on my credit card for the service that I never even asked for. They were quick to remove the charge but it should not have been there in the first place. This is not the first time I've had to have a monthly fee removed for services I did not order from Amazon.


Posted by:

Marcy Crossman
03 Dec 2018

Always use PayPal for online shopping. If you have a problem they are quick to get your money back. If you use PayPal Credit you won't even have to pay anything while disputing any charges. If the site where you are shopping doesn't offer PayPal, shop elsewhere.


There's more reader feedback... See all 34 comments for this article.

Post your Comments, Questions or Suggestions

*     *     (* = Required field)

    (Your email address will not be published)
(you may use HTML tags for style)

YES... spelling, punctuation, grammar and proper use of UPPER/lower case are important! Comments of a political nature are discouraged. Please limit your remarks to 3-4 paragraphs. If you want to see your comment posted, pay attention to these items.

All comments are reviewed, and may be edited or removed at the discretion of the moderator.

NOTE: Please, post comments on this article ONLY.
If you want to ask a question click here.

Free Tech Support -- Ask Bob Rankin
RSS   Add to My Yahoo!   Feedburner Feed
Subscribe to AskBobRankin Updates: Free Newsletter
Copyright © 2005 - Bob Rankin - All Rights Reserved
Privacy Policy -- See my profile on Google.


Article information: AskBobRankin -- [ALERT] Beware The Recurring Charge Scam (Posted: 23 Nov 2018)
Source: https://askbobrankin.com/alert_beware_the_recurring_charge_scam.html
Copyright © 2005 - Bob Rankin - All Rights Reserved