Consumers are increasingly being charged for services on their debit and credit cards they never wanted or intended to sign up for—and it’s costing them $215 a year.
Unwanted “grey charges” which refers to unwanted—but not illegal—charges like when a free trial of a service converts into a paid subscription with little or notice. Collectively, these sneaky charges are costing Americans $14.3 billion annually.
Free-to-paid services make up the bulk of grey charges, at $6.1 billion, followed by $2.5 billion in phantom fees, which are fees that come after you purchase a product or service online, and are charged for another item you did not purchase. An estimated $707 million comes from unintended subscriptions, followed by $622 million in misleading advertising and $340 million in memberships, according to BillGuard, a consumer protection mobile app.
The company’s research also found that one in three American cardholders is being charged for these unwanted services and products. BillGuard analyzed data from 5,000 users.
These added charges tend to be small and overlooked by consumers--but they add up.
“They may catch the attention of the Consumer Financial Protection Bureau, and in that light may be considered unfair or deceptive,” says credit expert Gerri Detweiler of Credit.com. “Then regulators may step in to change that. A lot of times consumers will either pay the charge or contact the company to get a partial refund, but they don’t complain to anyone else.”
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Unless there are enough cumulative consumer complaints, these grey charges will continue to remain under the radar, she adds.
Here are a few tips from Detweiler on how to avoid being a grey charge victim:
No. 1: Be wary of giving up your info for “free” promotions. Detweiler says if you have to give your credit or debit card info for “free” services, it most likely means it won’t be free at a later date unless you actively remember to cancel it.
No. 2: Check all statements. Detweiler says to read your bill statements every month in detail, even if you have auto-payment, to catch any sneaky add-on charges.
“Sometimes automation can be a blessing and a curse,” she says. “You are less likely to have payments missed if its automatic, but you also need to monitor your statements."
No. 3: Follow dispute instructions. If you do have to dispute a charge, be sure that you get everything in writing.
“It’s fine to call to dispute charges, but always get things in writing to protect yourself under federal law,” Detweiler says. “You should write a complaint to the credit card company, and by law they have to respond to you.”
No. 4: Annual recurring charges. If you sign up for a once-yearly product or service, set a reminder on your phone or calendar to follow up or cancel next year.
“You don’t realize they will get on charging you,” she says.