As consumers purchase more products and services online, the Better Business Bureau warns consumers that unscrupulous companies using deceptive auto-renewal scams are also on the rise.
Auto-renewal scams include subscriptions and contracts for good and services with terms so hidden, consumers don’t realize they are authorizing the company to continually charge their bank account or credit card. The Better Business Bureau warns that companies often use what is called the “Negative Options” to trick consumers.
The “Negative Options” auto-renewal scam occurs when a company will automatically enroll a customer into an automatic renewal of a good or service unless the consumer tells them they do not want to be enrolled. Often the auto-renewal terms are hidden in fine print or the company uses deceptive language to hide the fact they are being enrolled. Consumers report being shocked by auto-renewal charges on their bank or credit card statements, but since the consumer didn’t cancel the subscription, the company automatically charges them for services or goods they did not want.
Further complicating things for consumers, and leading to windfalls for unscrupulous companies, canceling these auto-renewal scams can be difficult if not impossible. Consumers report being stonewalled when they attempt to contact the company to cancel their auto-renewal or being unable to find instructions on how to cancel their subscription. Some companies refuse to refund customers who assert they did not want to sign up for a subscription. Cancellation instructions have also been “lost” by certain companies who then hit consumers with another auto renewal charge the following month.
The Better Business Bureau reports that although auto-renewal clauses are legal, federal agencies and some states are beginning to regulate these clauses to help protect consumers.
Auto-Renewal Scams Legislation
The Federal Trade Commission has taken notice of auto-renewal scams and has issued the “Negative Options Rule”. Businesses using auto-renewal must meet certain requirements, which include:
- Providing clear and conspicuous terms before obtaining billing information;
- Obtaining the express consent of consumers before charging bank accounts or credit cards; and
- Providing consumers easy ways to cancel the auto-renewal.
Various states have enacted laws protecting consumers from auto-renewal scams, including California and Illinois. It should also be noted that it is the location of the consumer that matters when it comes to auto-renewal regulations, not the company. So, a company located in a state without auto-renewal regulations would still have to comply with California’s strict regulations if they wanted to sell online to California customers.
The Better Business Bureau also recommends that consumers report auto-renewal scams so they can help track these schemes and report them to consumers and lawmakers. Consumers can also help protect themselves by looking for auto-renewal scams while online shopping before falling. If a consumer does end up stuck in an auto-renewal scheme they may wish to contact an experienced attorney to help protect their legal rights and stop the scammers.
Were you the victim of an auto-renewal scam? Fill out the form on this page now for a free legal review to see if you have a case to file or join a lawsuit against the company. You may be able to recoup the money you lost and help other consumers harmed by unethical business practices.