Free Trial Offers Sometimes Come With A Catch



Free Trial Offers Sometimes Come With A Catch Posted Thursday, December 17, 2009 by Charlie Mattingly The Better Business Bureau, the Federal Trade Commission and Visa, Inc. are holding a joint news conference today at the National Press Club in Washington, D.C. to alert consumers and ethical businesses regarding problems that can result when free trial offers include a negative option feature. This means that people who accept a free trial (“Get a Free 30 Day Supply,” for example) are also enrolling to purchase a service or product from the company, usually at a monthly charge ranging from a few dollars to much more. The paid enrollment automatically takes effect, usually with a monthly charge on the consumer’s credit card, unless the consumer acts to cancel the enrollment within a set period of time (this is what is called the “negative option” part of the offer). Some online offers bury the terms of the offer in the fine print or use pre-checked boxes above the sign-up button. The Better Business Bureau regularly receives complaints from consumers who feel that they have been misled by these free trial offers. In addition, Visa monitors its payment network to identify merchants with excessive levels of cardholder disputes. According to Visa, merchants who use deceptive marketing practices such as those that may be associated with free trial offers and negative option enrollments will frequently have up to 20 times as many consumer disputes as the average e-commerce merchant. Unfortunately, reputable online merchants can enter into partnership arrangements that may undermine trust. I found a “relatively tame” example of such an arrangement earlier this week when making a holiday flight reservation for my son. We used Orbitz to make this reservation. Orbitz is a reputable online travel site that is BBB Accredited and has an A+ BBB rating. But upon completing the reservation, Orbitz’s confirmation screen says, “Your reservation is complete. Click here to claim your $25.00 Cash Back incentive on your next Orbitz reservation,” and displays a “CONTINUE” button. Below the button, in smaller print, it states, “By clicking above, you can claim your incentive from our preferred partner when you join their service.” (CLICK HERE to see a copy of this Orbitz message.) When I clicked the “CONTINUE” button, I was taken to the website of Orbitz’s “preferred partner,” a company doing business as “Reservation Rewards” and webloyalty.com. The new web page says, “Congratulations…Just complete the 3 easy steps below to sign up for Reservation Rewards® to get your Money-Saving Discounts up to 50%...plus claim your $25.00 Cash Back Incentive Coupon.” An eye-catching $25.00 Cash Back Incentive coupon appears on the page, along with a large button that says, “YES! Click here now to sign up.” In smaller but easily-readable type, the second paragraph below the headline states, “You get Discounts up to 50% at leading Retailers you now and trust FREE for the next 30 days and only $12 a month thereafter.” The reason I consider this is a “relatively tame” negative option offer is because disclosure of the monthly charge is reasonably obvious and not hidden deep in the fine print, as some less ethical offers are. (CLICK HERE for a copy of the offer.) Nonetheless, the Reservation Rewards/webloyaty.com offer is not problem free, as reflected by the company's BBB Reliability Report. The company has a C+ rating with BBB, a result of BBB determining that 30 of the 2318 complaint filed with BBB in the past 36 months are “serious” in nature. This C+ rating is much better than a D or F rating that some less ethical online merchants will have, but it still means that the company is ineligible for BBB Accreditation. Reviewing the company’s Better Business Bureau report suggests that numerous consumers feel they were misled by the offer. Should these consumers have read the offer more carefully before signing up? Yes indeed. But the company could improve trust in itself (as well as it’s marketing partner, Orbitz) if it made disclosure of the $12 monthly charge more visible and obvious during the sign-up process. The company could also be more forthright in letting consumers know what they must do to opt-out of the monthly enrollment.

The Better Business Bureau, the Federal Trade Commission and Visa, Inc. are holding a joint news conference today at the National Press Club in Washington, D.C. to alert consumers and ethical businesses regarding problems that can result when free trial offers include a negative option feature. This means that people who accept a free trial (“Get a Free 30 Day Supply,” for example) are also enrolling to purchase a service or product from the company, usually at a monthly charge ranging from a few dollars to much more. The paid enrollment automatically takes effect, usually with a monthly charge on the consumer’s credit card, unless the consumer acts to cancel the enrollment within a set period of time (this is what is called the “negative option” part of the offer). Some online offers bury the terms of the offer in the fine print or use pre-checked boxes above the sign-up button.

The Better Business Bureau regularly receives complaints from consumers who feel that they have been misled by these free trial offers. In addition, Visa monitors its payment network to identify merchants with excessive levels of cardholder disputes. According to Visa, merchants who use deceptive marketing practices such as those that may be associated with free trial offers and negative option enrollments will frequently have up to 20 times as many consumer disputes as the average e-commerce merchant.

Unfortunately, reputable online merchants can enter into partnership arrangements that may undermine trust.

I found a “relatively tame” example of such an arrangement earlier this week when making a holiday flight reservation for my son. We used Orbitz to make this reservation. Orbitz is a reputable online travel site that is BBB Accredited and has an A+ BBB rating. But upon completing the reservation, Orbitz’s confirmation screen says, “Your reservation is complete. Click here to claim your $25.00 Cash Back incentive on your next Orbitz reservation,” and displays a “CONTINUE” button. Below the button, in smaller print, it states, “By clicking above, you can claim your incentive from our preferred partner when you join their service.” (CLICK HERE to see a copy of this Orbitz message.)

When I clicked the “CONTINUE” button, I was taken to the website of Orbitz’s “preferred partner,” a company doing business as “Reservation Rewards” and webloyalty.com. The new web page says, “Congratulations…Just complete the 3 easy steps below to sign up for Reservation Rewards® to get your Money-Saving Discounts up to 50%...plus claim your $25.00 Cash Back Incentive Coupon.” An eye-catching $25.00 Cash Back Incentive coupon appears on the page, along with a large button that says, “YES! Click here now to sign up.” In smaller but easily-readable type, the second paragraph below the headline states, “You get Discounts up to 50% at leading Retailers you now and trust FREE for the next 30 days and only $12 a month thereafter.” The reason I consider this is a “relatively tame” negative option offer is because disclosure of the monthly charge is reasonably obvious and not hidden deep in the fine print, as some less ethical offers are. (CLICK HERE for a copy of the offer.)

Nonetheless, the Reservation Rewards/webloyaty.com offer is not problem free, as reflected by the company's BBB Reliability Report. The company has a C+ rating with BBB, a result of BBB determining that 30 of the 2318 complaint filed with BBB in the past 36 months are “serious” in nature. This C+ rating is much better than a D or F rating that some less ethical online merchants will have, but it still means that the company is ineligible for BBB Accreditation. Reviewing the company’s Better Business Bureau report suggests that numerous consumers feel they were misled by the offer. Should these consumers have read the offer more carefully before signing up? Yes indeed. But the company could improve trust in itself (as well as it’s marketing partner, Orbitz) if it made disclosure of the $12 monthly charge more visible and obvious during the sign-up process. The company could also be more forthright in letting consumers know what they must do to opt-out of the monthly enrollment.

Comments

I too recently encountered a similar problen when purchacsing tickets through Ticketmaster. Before I knew what I had done. I was getting billed around $12 a month on my credit card for coupons that I wasn't inrterested in. Coupons should be free anyway. An incentive to buy a particular manufactures product as a trial. This practice should be illegal but these type of scams seem to continuously slip through the cracks of any authourity of jurisdiction. Maybe more strengent accreditations should be made by BBB and let the news out. In times of today, it seems that you have to sppend all of your spare time and some not do spare just reading fine print of services you want or wouod like to try just to protect yourself from getting ripped off everytime you turn around. But it seems that there is allways an abundent supply of lawyers top protect tthe scammers and none to protect the average consumer. Where is the consumer protection agencies when you need them! I guess they are afraid they might hurt someones feelings!

Comment By John At 4/16/2010 7:51 AM