A new study reveals that Americans have unknowingly been enrolled in auto-pay programs at an alarming rate.
According to a recent study by Creditcards.com, 35% of Americans affirmed that they had signed up for a service, subscription, or membership that enrolled them in an auto-pay program without their permission or knowledge. Of those surveyed, once the auto-pay was discovered, 89% of consumers rejected the auto-pay and turned it off, and over half of the respondents said they did not find it easy to cancel the auto-pay. The statistics support a growing number of lawsuits over deceitful auto-pay practices.
The advent of the internet has made it easier for individuals to pay bills on time and companies argue that auto-pay allows consumers to ensure they don’t miss a payment. However, consumer advocacy groups note that auto-pay programs are notorious for tricking individuals into signing up for services they do not want, often through the “negative enrollment option,” and making it difficult, if not impossible for the consumer to cancel the service.
Although most consumers who do not know that they are signed up for an auto-pay program become aware after they are hit with another month of payments, companies often refuse to refund that payment, racking up millions of dollars for services and goods consumers did not want in the first place.
According to the Creditcards.com study, those aged 37 to 52 are more likely to have unknowingly enrolled in an auto-pay program. Sleep-deprived parents are also more likely to be victimized than non-parents. Further, consumers with high income and education levels report that they are more likely to unwittingly sign up for an auto-pay program than those who make less than $30,000 per year.
While most survey respondents said they canceled the auto-pay program when discovered, just over half said that they received a refund from the company.
While the offer of free trials, gifts, or complementary services seem like no-brainers, consumers should be cautious when signing up for and providing financial information to businesses in order to score these goodies. Companies have been known to hide auto-pay enrollment in the fine print and/or by using a confusing “negative enrollment option” that opts a consumer into the program as they check-out.
In addition to consumer advocacy groups, state legislatures have begun regulating companies’ use of auto-pay programs. Nearly two-dozen states require that companies provide clear statements about their auto-pay policies to consumers before signing consumers up for the service. Under various state laws, companies also have to obtain permission from individuals before charging them for a renewal and are required to make the cancellation of the auto-pay easy. Unfortunately, not all companies protect their customers from being tricked into auto-pay enrollment.
If you have unknowingly been enrolled in auto-pay service, consider contacting an experienced attorney with Bradley/Grombacher to help protect your legal rights. An attorney can also help protect others from falling for a company’s auto-pay scam.