Wednesday, October 6, 2010

'Click to Save' scams

Online shoppers are familiar with the idea of clicking for coupons and discounts. But one wrong click can stealthily add hundreds of dollars to your credit card balance.
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These so-called "coupon click fraud" scams have become pervasive enough to draw the attention of state and federal authorities: last year a federal judge in Boston approved a $10 million class-action settlement against marketer Webloyalty; the New York State Attorney General's office recently reached $18.5 million in settlements with two separate marketers and some of their retail partners; Congress and the Federal Trade Commission have investigated. And in spite of the profits it yields, even online shopping sites have started to realize that subjecting their customers to these kinds of scammy offers is bad for business: In response to customer complaints, several big online businesses — including Orbitz, and VistaPrint — have abandoned such partnerships.
[Click here to check current credit card offers, including rates and terms.]
But consumers still need to be vigilant about where and how they shop online to avoid other schemes. After all, previous state settlements haven't stopped marketers from continuing deceptive practices, or kept consumers from falling for them.
These offers look harmless enough. After shelling out $75 for a bouquet of flowers or $30 for movie tickets, internet shoppers are presented with an offer: "Click here to save" $5 or $10 on your next purchase. But there's no coupon to be found, only an invitation to join a discount club for a small monthly fee.
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What consumers don't realize — and the sites bury in the fine print — is that the initial click was enough to transfer your credit card information from the merchant to the club, and enroll you automatically. Suddenly you're paying $4 to $20 per month, billed directly to your credit card. Many consumers don't even notice the charges until after they've paid hundreds of dollars for a discount-club membership they didn't even know they had.
The New York Attorney General's office agreed, launching investigations into two of the biggest perpetrators. As a result, affected New Yorkers will receive instructions in the mail about how to claim a refund. The rest of us are on our own.
Here's how to protect yourself and how to get your money back if you've already gotten snared:
Skip Debit
More consumers used debit cards than credit cards last year, the first time in history that's happened, according to a September 2010 report from Javelin Strategy & Research. But using a debit card online can make shoppers more vulnerable if they do get scammed, says Paul Stephens, the director of policy and advocacy for the Privacy Rights Clearinghouse, a nonprofit consumer advocacy group. The Fair Credit Billing Act limits personal liability for unauthorized credit card charges to $50, with most issuers waiving even that. Debit card protections, however, depend largely on how fast you spot and report the fraud, he says. Meanwhile, even one small, unexpected charge from a discount club can wreak havoc on your checking account, spurring overdraft fees.
Don't Click
If a retailer does offer some kind of post-purchase deal or rebate, you'll get the details directly via e-mail, says Randy Allen, an associate dean for Cornell University's Johnson Graduate School of Management. In other words, you'll never have to click. Instead, you'll receive an email notifying you of an earned reward or rebate., for example, offers 5% rebates automatically accrued in your online account, which you set up during check-out. Still worried? Log into your account on the retailer's site to check for eligible coupons instead of clicking through from your email.
Fight Back
When scrutinizing your credit card bill each month, don't be shy about questioning charges, says Edgar Dworsky, the founder of consumer advocacy site Figure out how far back the charges go, and then call the toll-free number for the company that's listed on your statement to ask for a refund. Most marketers will oblige, but if not, you can file credit card chargeback for the un-refunded fees, he says. Call your card's customer service line and ask to file a dispute. You'll need to answer a few questions by phone, and possibly fill out a form.

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