Dear Consumer Ed:

Last month I signed up for a 30-day free trial for a credit monitoring system. I just got my latest credit card statement and see that the company just charged me a $29.99 fee. When I spoke to them they told me that since I never called to cancel after the free trial, they had automatically renewed my service. I don’t think I should have to pay this bill. What can I do?

Consumer Ed says:

This practice – automatically renewing an agreement unless the customer specifically notifies the company in advance not to renew – is called “negative option billing.” It is a tactic that is being used by more and more businesses, often to the detriment of consumers. Although it is a “legal” practice, there are rules that businesses that engage in this type of billing are required to follow:

  1. Any promotional materials, such as advertisements, sent to you before you contracted with the business must clearly describe billing details, and whether you are automatically re-enrolled after the initial trial period. These materials must also describe how you are to contact the business to cancel your account before the next billing cycle.
  2. After your agreement is in effect, the business must mail you, before any automatic billing, a form notifying you that the agreement will be renewed unless you specifically cancel. The business must also tell you what method you need to use to cancel – i.e. by email, in writing, etc.

You are not bound by the automatic renewal if the business has not complied with these requirements. Therefore, you should go back and read your agreement closely, as well as any promotional materials you received before you entered into the agreement.If you were not appropriately notified of the negative option billing, you should not have to pay the money. You may want to consult with a private attorney to discuss the specifics of your situation.  

Also, note that you do not have to pay for a credit monitoring service in order to review the information contained in your credit file. Under federal law, you are entitled to a free credit report every year, and under Georgia law you are entitled to two free reports. You may want to consider this option instead of paying a company for a similar service. To receive your free reports go to annualcreditreport.com or call 877-322-8228.

If you enjoyed this post, make sure you subscribe to my RSS feed!