SALT LAKE CITY — One in three Americans who shop with plastic are getting hit with misleading, unintentional and unwanted fees.
They're called gray charges and they're costing shoppers an average of $215 a year.
"It could be something like an insurance, automatic subscription," said Preston Cochrane, president and CEO of the Utah AAA Fair Credit Foundation. "It could be a membership, something on an annual or repetitive basis that they didn't necessarily sign up for but that's an add-on in the end."
Consulting group Aite said gray charges cost cardholders nationwide more than $14 billion just last year. Cochrane isn't surprised.
- Zombie subscriptions. Consumers cancel a service, but it "comes back to life" against their will.
- Unwanted auto-renewals. Consumers sign up for products and forget to cancel before the date of their automatic annual renewal.
- Negative option marketing. Merchants use various tricks to enroll consumers in purchase agreements unless they actively opt out.
- Free-to-paid services. Some merchants trick consumers into paying for services they think are free, or persuade them to sign up for free trials which automatically become paid services
- Cost creep. A monthly or quarterly purchase that slowly climbs from $5.99 to $6.99 to $7.99, and so on, under the buyer's radar.
"Online shopping continues to soar. When people buy things online, that's where those gray charges can come into play," he said.
The most common gray charges are those so-called "free-to-paid" charges. Customers end up getting billed monthly when the free trial on their teeth whitener, facial cream or some other product comes to an end.
Then there are phantom charges for some product or service the consumer didn't even want. A good example is the credit monitoring people are shackled with when they order a free credit report.
While some may view these gray charges as sneaky and misleading, they're not necessarily illegal.
"You want to make sure you read the fine print," Cochrane said, including the terms and conditions. Buried in there somewhere is the warning that the fees are coming.
"We're just too busy, not looking at the fine print, just scrolling down and assuming the purchase we made is the correct figure, when we come to find out the gray charges were added on," he said.
Also, whenever I see the word "free" from a company I haven't heard of, I assume nothing is "free" and it may be a scam.
If you spot a gray charge on your statement, Cochrane said you should call the merchant first. If you don't get a straight answer from them, call your credit card company and dispute the charge.
Card issuers hate gray charges as much as consumers do. They get nearly 24 million calls from frustrated customers about these fees each month.