The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.
One of the sneakiest financial developments of the past decade has been the proliferation of grey charges added to consumerโs accounts, often without the consumer realizing it.
There are so many companies taking advantage of grey charges that nearly everyone is affected in some way. In many cases, the consumer has been charged these charges for months before they realize it.
Fortunately, you can fight back against grey charges and eliminate them from your life if you identify them and take steps to protect yourself against them.
Identifying Grey Charges
Grey charges are repeated charges made to your bank account or credit card without you authorizing each purchase.
Companies that request the right to deduct money directly from a consumerโs bank account for goods or services fall into this category. Other companies enroll you in a service plan that allows them to charge your debit or credit card on a regular basis without you authorizing each charge. In most of these cases, you cannot access the service or product without first giving the company authorization for automatic charges to your accounts. Some companies use every trickย that they can to get onto your credit card statement because they’re banking on the fact that you’re not paying attention during the sign-up process.
Grey charges can be found in magazine subscriptions, online game subscriptions, book or movie club memberships, automatic renewals, and free services that switched to premium paid services without your knowledge. The most notorious source of grey charges is the free trials that require your credit card for the trial. Securing your credit card information in the beginning ensures that the companies can charge a consistent stream of subscription fees at your expense. The trial is what gets you in the door and allows them to charge your credit card bill every month.
Eliminating Grey Charges
It is important to try and reverse or cancel the charges as soon as possible to prevent more money from being siphoned out of your account. Having the charges eliminated can be time consuming and it is very easy to get frustrated with the situation. In fact, getting rid of these charges can be extremely difficult if you are dealing with an unscrupulous company. After all, the company that placed these charges on your account want to keep the charges going for as long as possible so that they can make as much money as they can.
In some cases, the company will throw up unnecessary roadblocks to prevent you from canceling the charges quickly. These roadblocks may include having to travel to a physical location to cancel the service in person, having to send in paperwork or documentation to the company, having to provide a reason for the cancellation or discuss the cancellation with multiple representatives of the company.
The easiest way to avoid these charges is to simply not do business with companies that engage in this practice. Grey charges often happen because consumers aren’t paying attention when making a purchase, so you can combat these charges by being mindful andย monitoring your purchasesย on your credit card and bank account statements on a monthly basis. You should also read the fine print before going through with the transaction and ask questions about anything that you do not understand. If the rep cannot answer the questions or there is no one available to ask, you may want to reconsider your purchase.
My Personal Experience
A few years ago, I decided that I was going to join a local gym to get into better shape. This gym would only grant you a membership if you signed up for the membership plan that deducted the membership amount from your bank account automatically. I had no problem with this while I was going to the gym regularly, but the problems began when I decided to cancel my membership while planning to move across town to a new neighborhood.
There seemed to be no way to cancel my membership. When calling the company to cancel, I was told that I had to speak with a customer service representative in person. Traveling to the location to cancel in person brought a long interview where I was encouraged to make use of their other facilities (too far away to be convenient where I was moving) or put the membership into hiatus (allowing them to continue charging my account a lesser fee for no service at all).
Even after reiterating multiple times to multiple people that I wanted to cancel my membership, I still found that I was being charged the full membership fee months later. I ended up closing the bank account to prevent any more charges from being deducted from the account without my authorization. In response, the company began sending me letters letting me know that they were continuing to charge me and that I now owed them money that I needed to remit immediately, instead of just cancelling my membership. I had to threaten legal action to get the harassment to stop.
My Decision
While not all companies are bad in this way, I have to admit that this one bad experience has ruined it for everyone else. I have never again signed up for an account with any company that required them to make automatic transactions from my bank account for goods or services. I would love to join another gym, but instead I walk around my neighborhood and exercise at home. There are some products that I would love to try, but having clearer skin isnโt worth the headache I might face trying to cancel the service plan.
This is the decision that I have made, but it may not be the right decision for you. Before signing an agreement with any company that wants you to allow them to make automatic charges to your accounts, review your options carefully. You can also go online and perform a search to see if there have been many complaints by people trying to cancel the service or stop the automatic charges from occurring. You may find that the product or service is not worth the trouble after all.
How about you all?ย Have you had difficulty with grey charges in your life? How did you get the charges to stop?ย
Share your experiences by commenting below!ย
***Photo courtesy of http://www.flickr.com/photos/restlessglobetrotter/3378489363/
