Have you ever signed up for a “Free” offer, only to find out that you were automatically enrolled in some sort of recurring membership that you never signed up for?
This somewhat deceptive practice is called “Negative Option” marketing and is usually attached to free trial offers or free merchandise, such as DVD’s, etc. Although this practice exists in many niches (and has been around for a long time – ever bought a cassette from Columbia House?) , it is prominent in “Make Money” type products.
The FTC and Visa/Mastercard are cracking down on it. Visa and Mastercard are now actively declining merchant account applications from companies that do this sort of business, and going back through existing merchants and cancelling the agreements of those companies that are already established and practice this type of marketing.
Yes, some of these companies disclose very clearly up front that if you get the free whatever, in 7 days you will begin getting billed 399.99 a month on your credit card automatically for the idiot of the month club…but when you try to call and cancel, the line is busy, disconnected, or worse…and you have to send 5 different emails and a postcard to cancel…and by the time you do, the time has elapsed to cancel, you get billed, and there is no recourse other than a dispute or chargeback.
For more information on negative option, check out the FTC’s site on it here.
