The Better Business Bureau applauds Ellen DeGeneres and Sandra Bullock, the news media, Mastercard and the Federal Trade Commission who have made it harder for dubious online free trial offers to ensnare consumers in the months following a December 2018 BBB study.
The BBB study, “Subscription Traps and Deceptive Free Trials Scam Millions with Misleading Ads and Fake Celebrity Endorsements,” reported that consumers filed nearly 37,000 complaints and Scam Tracker reports with BBB in the previous three years with an average loss of $186.
Through October 2019, BBB received more than 6,600 complaints and reports from consumers in the U.S. and Canada about free trial offers.
“Free trial offers continue to be a real problem for thousands of people, and it is important for those who have run afoul of these scams to speak up and report them,” said Steve Baker, BBB’s international investigations specialist and author of several other BBB investigative studies.
As ABC’s Good Morning America, NBC News, and CBS News This Morning reported, free trial offers often use celebrity endorsement ads on social media and the internet to attract consumers and then lure them to deceptive websites to charge consumers a small shipping and handling fee, usually $4.99 or less, for the “free” trial of products like skin creams or weight loss pills. The true cost of these free trials — ongoing monthly subscription plans — is buried in small print and behind links, if it is disclosed at all.
According to a November Consumer Reports article, “Reputable retailers, however, provide a straightforward process for canceling further charges, such as clicking an unsubscribe link on a confirmation email or changing a setting on your account page. But free-trial fraudsters do not, instead placing unauthorized credit card charges on your account and making it difficult, or nearly impossible, to cancel additional charges.”
The BBB study found many of the celebrity product endorsements it investigated were fake and that sometimes the fine print even admitted the endorsements were not real.
Ellen DeGeneres and Sandra Bullock recently took legal action to stop companies from using their likenesses in fake free trial offer ads to promote products.
“The celebrity endorsement-theft business model is based on a scheme to trick consumers into disclosing their credit card and/or debit card information in order to enroll them in costly programs with undisclosed, or poorly disclosed, recurring charges,” states the lawsuit by DeGeneres and Bullock.
CBS, ABC, NBC, and other news media acknowledged BBB’s research in their recent coverage of the issue. The New York Times wrote, “Dubious offers of free trials put forward online through affiliate marketers ‘have infested the internet and social media’…according to a report last year from the Better Business Bureau.”
NBC News reported in October that scammers “have a ‘new and improved’ way” to fool consumers, as identified by Consumer World. “Shady operators are publishing fake online news stories designed to look like they’re from a trusted news source, such as NBC, CNN, Fox News, ESPN and ‘People’,” according to the NBC story. The phony news stories describe how celebrities experienced miraculous results using a variety of products. At the bottom of the story is a free trial offer and fake customer reviews.
In the free trial offer study, BBB urged credit card companies to do more to ensure victims receive chargebacks when key conditions are not adequately disclosed. It challenged credit card companies to identify and combat deceptive free trial offers employing credit card systems because this fraud is dependent on the use of credit cards.
The month following the release, Mastercard announced new policies for free trial offers that require merchants to gain cardholder approval at the end of the free trial before they can start billing. Merchants must text or email the cardholder with the transaction amount, payment date, merchant name, receipts and explicit instructions on how to cancel a trial BEFORE they are billed. In addition, they require that the cardholder’s statement include the merchant website URL or the phone number of the store where the cardholder made the purchase.
In September, the FTC obtained a preliminary injunction halting an online beauty seller’s deceptive “Free Trial” Offer. The agency alleges AH Media Group defrauded consumers nationwide out of more than $35 million. The company has an F rating with BBB.
“These companies promised ‘free’ trial offers — telling people that they would pay only for shipping and handling — but then enrolled people in a subscription plan, placing big unauthorized charges on their credit cards every month,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a news release. “When you sign up for a free trial, but the merchant asks for your credit card for shipping and handling, you should be on-guard. Read the fine print of the offer, pay attention to your credit card statement, and contact your bank if you see any charges that you did not authorize.”
In May, the FTC added a payment processor in a free trial offer 2018 complaint against Apex Capital Group, LLC. The amended complaint alleges the newly added defendants engaged in credit card laundering and evaded credit card chargeback monitoring programs.
Sometimes, dubious companies do unravel, as detailed in an October Buzzfeed story, Trap King: How A Massive Facebook Scam Siphoned Millions Of Dollars From Unsuspecting Boomers, about Ads Inc., a free trial offer company.
BBB offers the following tips to consumers considering free trial offers:
- Research the company before signing up. Many of these companies have “F” ratings with BBB. Check the product or company name on the Better Business Bureau website to see if there are any complaints.
- Read all the terms and conditions of any free trial offer. Know if there is a cancellation period and return policy.
- If you think you have been the victim of a free trial offer scam, speak with your credit card company. Some may issue a refund for the money lost.
- Check the social media accounts of the celebrities the ads claim are endorsing the product to see if they are really backing it.