The New Jersey Division of Consumer Affairs is sending this Consumer Alert in order to call attention to so-called "grey charges" – hidden credit card and debit card charges that occur when consumers are deceptively signed up for products they never ordered, wanted, or intended to pay for.
a new report by BillGuard and Aite Group, credit and debit cardholders in the United States incurred 233 million grey charges in 2012, totaling $14.3 billion in charges. Roughly three in 1,000 credit card charges are grey charges, averaging $61 per transaction.
Grey charges are defined as "deceptive and unwanted credit and debit card charges that occur as a result of misleading sales and billing practices." The report identifies the following types of grey charges:
Free-to-Paid Charges, which accounted for 15 million transactions, totaling $6 billion, in 2012. Common Free-to-Paid charges are "free trials" for credit monitoring services that charge consumers monthly fees if they don't affirmatively cancel on time.
Phantom Charges: Consumer agrees to a transaction and then receives an unwanted additional product or service that may come from the original seller or a third-party seller.
Zombie Charges: A subscription or membership that doesn't end even after you cancel it.
Unintended Subscriptions: Consumer completes a one-time transaction that turns into an unwanted ongoing subscription.
Membership: Consumer joins a club that offers products/services at a discounted price. In the fine print, the consumer agrees to receive and pay for merchandise periodically unless the club is notified not to send it.
Auto-Renewals: Consumer enters into an agreement to purchase goods or services. If the consumer does not cancel prior to the cancellation deadline, the seller automatically renews the subscription for another term and bills the consumer for it.
Consumers can take the following steps to protect themselves:
- Actively review and validate all credit card and debit card transactions. Review your monthly statements very carefully.
- Pay close attention to any "free" services you sign up for. Make sure to cancel before the free offer becomes a paid service. After you cancel, check your credit card statements to make sure you are not being charged.
- Immediately dispute any unauthorized charges with your credit card company or bank.
- Immediately dispute any unauthorized charges with the company that is charging them.
- Keep good records.
- Use only one credit card to sign up for services. This will make it easier to track all charges and look for unwanted grey charges.
- If grey charges continue, ask your credit card company or bank to close the affected account and issue a new one.
Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file an
online complaint with the State Division of Consumer Affairs by visiting its website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504- 6200.
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