Beware of unexpected buyers' clubs charges
- By Milt x_Zall
- Mar 08, 2001
National Fraud Information Center
Consumers are finding charges on their credit card bills and debits from
their bank accounts for memberships in buyers' clubs that they never agreed
to join, according to the National Consumers League, a nonprofit advocacy
Complaints about buyers' clubs to NCL's National Fraud Information Center,
a hotline for consumers to report telemarketing fraud, are on the rise.
They've climbed from an average of four per month in 1999 to 12 per month
in the first six months of this year. Buyers' club complaints rank as the
ninth most common telemarketing complaint.
In some cases the charges or debits have appeared after consumers called
to buy merchandise such as beauty products and lighting fixtures that were
advertised on television.
"Typically the products are offered for very low prices, or they may
be free but the consumer pays for shipping," NFIC director Susan Grant said.
"What consumers may not notice is a disclosure in fine print on the TV screen
that purchasers will be enrolled in a club that offers discounts on other
In other cases, consumers have received calls from telemarketers selling
products and offering, in addition, buyers' club memberships. Sometimes
they are described as "free trial offers" but the charges are made immediately.
Other consumers report being charged for memberships despite the fact that
they said they only wanted the merchandise and didn't want to join the club.
And some consumers say they have received "welcome packets" for club
memberships even though they did not recall having any contact with the
company. These included notices that the consumers would be charged unless
they contacted the company to cancel. But when they called, the consumers
couldn't get through or were told the charges would not be removed.
NCL plans to urge the Federal Trade Commission to look closely at these
buyers' club problems. NCL also suggests that the FTC plug some loopholes
in the existing rule and strengthen it by:
- Including under the rule calls that consumers make to marketers in
response to advertisements in the newspaper, on television and in other
- Requiring that telemarketers who make "trial offers" must notify consumers
when the free period is up and get their consent to be charged for continued
- Requiring telemarketers to tell consumers that they have the right
under federal law to be put on a "do not call" list if they do not wish
to hear from the company again.
Be wary of offers that involve very low prices or free products. "These
offers may only be the lure to get your credit card or bank account information,"
Grant said. She also cautioned consumers to look at their credit card and
debit card statements carefully. "Once someone has your account number,
it's possible to charge you or debit your account even if you never agreed
to purchase the services," she said. Consumers who find unauthorized credit
card charges or debits should dispute them immediately with their credit
card issuer or bank.
The top 10 telemarketing frauds reported to NCL's National Fraud Information
Center in the first six months of 2000 were as follows:
1. Prizes and Sweepstakes: phony prize awards requiring payment of fees
2. Magazines: fake sales or renewals for magazine subscriptions that
are never received.
3. Credit card issuing: phony promises of credit cards requiring advance
payment of fees.
4. Work-at-home: kits sold with false promises of profits.
5. Advance fee loans: empty promises of loans requiring advance payment
6. Telephone slamming: phone service is switched without the consumer's
knowledge or consent.
7. Credit card loss protection: unnecessary insurance sold using scare
tactics or misrepresentations.
8. Telephone cramming: billing consumers for optional services they
9. Buyers' clubs: unauthorized charges for memberships in buyers' clubs
consumers never agreed to join or didn't agree to renew after initial trial
10. Travel/Vacation: offers of free trips or discount travel that never
Zall, Bureaucratus columnist and a retired federal employee, is a freelance
writer based in Silver Spring, Md. He specializes in taxes, investing, business
and government workplace issues. He is a certified internal auditor and
a registered investment adviser. He can be reached at [email protected].