Fool Me Once, Strike One. Fool Me Twice... Strike Three.

January 18, 2007 11:44 AM

Why does my credit card company keep trying to scam me? And how is it legal?

Every now and then, I'll receive an envelope from my credit card company that contains a check. Not a carbon-copy fake jobby like the ones Publisher's Clearing House used to send, that clearly indicate "This is total baloney" on the bottom. This is a real check, made out to me. Usually it's for something like $50. And there's a letter spewing crap about how the money is saying "thanks" for maintaining great credit (an obvious lie) and for being an excellent customer (a suspicious assertion), and how they're going to give me additional "Prestige Club" benefits, too.

For about 2.65 seconds, I actually congratulate myself and think about the wonderful and exotic beers I'll soon be enjoying with this 50 bucks. Of course, upon reaching second number 3 I return to my senses and read the separate little card with the fine print on the back. The fine print basically says, "Once you cash this check, we take this as an indication of acceptance on your part to enroll you in the 'Prestige Club." You will be automatically charged a $79/year fee until you figure out how to opt-out. Opting-out, of course, will be interpreted as an act of aggression that we will endeavor to thwart until you either die of terminal frustration or of natural causes."

How is this not a scam, and why couldn't people setup a class action suit to sue these scheming bastards? I don't fall for their trick, but I have to believe it works enough times that the credit card company is profiting from the trust, greed, and/or poor financial situation of its customers. If I ran a business that did the same thing to people, aside from being a total douchebag, how likely is it that I wouldn't be hauled into court, arrested for fraud, or be otherwise upended and pitchforked by an angry mob?

Also, I've seen this thread, but I'm particularly interested in the aspect of "How is this legal?"

posted by krippledkonscious to work & money (27 comments total)

As long as the details are disclosed in the fine print, it's perfectly legal. They are making an offer and making clear all the aspects of that offer. It's up to you to decide whether to accept it or not. If you do so without reading the fine print, that's your loss.
posted by Steven C. Den Beste at 11:46 AM on January 18, 2007

I don't really understand - they did tell you the details...the trick is most people don't read them, but that's not the fault of the company.
posted by agregoli at 11:48 AM on January 18, 2007

In general, things are legal unless they are prohibited by law. There is no law prohibiting this behavior in your jurisdiction.

In order to sue you would need a basis on which to state a claim. Failing to read the small print is not a good basis. No court would think it was reasonable to expect something for nothing.
posted by grouse at 11:54 AM on January 18, 2007

To me, the interesting part is "Opting-out, of course, will be interpreted as an act of aggression that we will endeavor to thwart until you either die of terminal frustration or of natural causes."

I wonder if there are legal limits on how much time and effort a customer must expend to cancel or opt out of a service.
posted by lalex at 11:54 AM on January 18, 2007

Yes, unfortunately this is something that most all (?) credit card issuers participate in, I've seen it often masked as enrolling in their Credit Protection Plan where you get access to your updated credit report. Thirding the above replies I'm sure its probably quite legal, but unfortunately those though normally get taken for a ride are gullible folks who believe you can get something (from a credit card company for godsake) for nothing.
posted by Asherah at 11:55 AM on January 18, 2007

If it really upsets you, cancel the card and tell them why.

Me, I call all my companies and opt-out of any non-billing mail. Solves the problem nicely.
posted by dobbs at 11:57 AM on January 18, 2007

I wonder if there are legal limits on how much time and effort a customer must expend to cancel or opt out of a service.

Usually in my experience it is very easy to opt out of these sort of things in writing. That and the cost of a stamp would not be considered very much time and effort. The mistake people make is trying to argue with customer service reps who are trained to keep you from leaving.

Even that is easier than most people make it out to be, because they are unwise enough to fall into the trap of giving a reason for cancellation.
posted by grouse at 11:58 AM on January 18, 2007

Of course it's the company's fault! They are deliberately attempting to mislead you into signing up for a service you wouldn't otherwise consider if they were selling it in a straightforward way. It may not be illegal, but it's unethical, the same as those phony Yellow Pages invoices oddball phone directory companies send to small businesses and the same as those domain renewal notices from Domain Registry of America that try to trick you into renewing your domain with them instead of your usual registrar. None of these is technically illegal, but they aren't right, either.

If I were in your shoes, I'd cancel the card and find a new one. Why do business with a sleazy company if you can avoid it?
posted by MegoSteve at 11:59 AM on January 18, 2007

I acknowledge that the fine print is what allows them to pull this off, but the added measure of issuing a check is what really gets me. This almost seems like entrapment, especially since the fine print isn't on the check itself.

Why is the act of check-cashing permissible as a triggering event to start charging you fees? What if they just mailed you a notice that said you were being enrolled for free, and the fine print said "Doing nothing for 30 days means you accept." And where is the line drawn on the opt-out period? What if they set it to 3 days instead of 30?

And what lalex said.
posted by krippledkonscious at 12:02 PM on January 18, 2007

wonder if there are legal limits on how much time and effort a customer must expend to cancel or opt out of a service.

Ask anyone who has tried to cancel AOL.
posted by jerseygirl at 12:04 PM on January 18, 2007

aehm... consumerist.com ...?
posted by krautland at 12:12 PM on January 18, 2007

Me, I call all my companies and opt-out of any non-billing mail.

You can do that??
posted by ThePinkSuperhero at 12:13 PM on January 18, 2007 [1 favorite]

This almost seems like entrapment, especially since the fine print isn't on the check itself.

That's not what entrapment means.

What if they just mailed you a notice that said you were being enrolled for free, and the fine print said "Doing nothing for 30 days means you accept."

Actually, something like that is probably permissible by your credit card contract. Most credit card agreements have terms allowing the issuer to change the terms of the agreement with, for example, 30 days notice, unless you opt out.

In any case, this is a slightly different animal. A contract consists of an offer and an acceptance. They send you the check and the terms as an offer, and by cashing it you accept the contract. If you don't want to accept the contract, don't cash the check.

What if they set it to 3 days instead of 30?

You would have had to agree to that in advance, just like you probably agreed to a longer period in your existing contract. You might want to re-read that contract now to see what other shenanigans they can pull.
posted by grouse at 12:21 PM on January 18, 2007

Wow. I remember long distance companies doing the same thing.

They would mail you a check for around $50 and if you deposited it, they would switch your long distance carrier to them. I haven't seen that trick in over 10 years though!
posted by dcjd at 12:26 PM on January 18, 2007

What credit card company sends you a check with nothing to indicate (on the check itself) that you're enrolling in some program if you cash it? I ask only because the ones I've seen all say on the check itself, sometimes the front, sometimes the back, what you're signing up for.

It can't be that hard to cancel, though, people sign up for these offers and then cancel within the free trial period to make money. There was even a question on Ask about that a few weeks ago.
posted by wierdo at 12:30 PM on January 18, 2007

Some states have protections against the 'fake check' mailer. It works great against people who speak english as their second language.

Very few companies do it and certainly not every credit card company. I'd just drop these guys, do a 0% APR transfer to someone else and never think of them again.
posted by damn dirty ape at 12:34 PM on January 18, 2007

If the company in question is Providian, you should probably think about switching, they're known for this kind of crap. Even if it isn't you might want to think about finding a more responsible card company.
posted by doctor_negative at 12:52 PM on January 18, 2007

damn dirty ape: do you know of any examples of states with this law in effect? I live in Hawaii and we have a large immigrant, non-English-speaking population. Basically the type of people I bet will get trapped (acknowledging poor use of entrapment above) with this kind of thing. They wouldn't bother trying to decipher the fine print, but they damn sure know what a check looks like, what it's usually for, and would probably skip all the way to the bank.

And yes, the company was Providian, and I'm transferring all my balances to another card as of this month. I guess I'll have to just wait and see what kinds of fun stuff I'll get with the new company.

I once had an idea where I'd start a company called "Credit Monitoring/Security Fee." I'd charge $.37 every month to people's credit cards, allowing them to opt-out, of course. I wouldn't actually do anything, but my inactivity would be well documented in the fine print of my contract, that I'd send out annually in a bulk-mail envelope looking like snail-mail spam. I'm betting most people would just see my company charge and do nothing. Once I get a few hundred thousand "customers," that $.37 really adds up! Anyone want in?
posted by krippledkonscious at 1:05 PM on January 18, 2007 [2 favorites]

krippledkonscious, in your business plan there is no offer or acceptance. Additionally, since you have provided nothing of value, a contract cannot be formed. Because you would be falsely claiming to your payment processor that such an agreement had been formed, you would be engaging in criminal fraud.

Do you really not see the difference between these cases, or are you just frustrated with your soon-to-be-former sleazy card issuer?
posted by grouse at 1:19 PM on January 18, 2007

They're credit card companies. They make their living off of people who believe in free money. It's technically legal because of the fine print, but I fail to see how most of what most credit card companies do is in any way ethical.
posted by tastybrains at 1:42 PM on January 18, 2007

I've never gotten a check before, but on Providian I had problems for a couple years in which they kept trying to charge me for credit protection services, and each time I would have to call and state that I know such services are a scam (they offer 'protection' that is already guaranteed under law, and/or they will endlessly dispute any claim you make under the service) and that I would never enroll in one, and I would ask that a note be made on my record never to allow such a charge...but still it would happen again.

My favorite part was how, each time I had to call to discuss it, the representatives would pretend they had never in their lives heard of customers disputing this kind of charge, or being given this service without consenting to it.

Basically, the recent change in bankrupcty law was pretty much the cherry on top for the credit card companies to get away with doing anything they want.
posted by troybob at 1:54 PM on January 18, 2007

grouse: Pardon my hypothetical and sarcastic rhetoric - "business plan" is not something that should have popped into your head upon reading my brain drool in the previous comment.

And yes, it's mostly frustration bred from the suspicion that people are getting screwed over this. The credit card companies are looking to create profits from this transaction based on negligence and misunderstanding on their own customer's part. If enough people get smart and disciplined enough to game this system for their own profit, the practice would be discontinued by the company. Sometimes it just makes a guy wanna go all Project Mayhem on their asses. But without all the nihilism and skank-banging.
posted by krippledkonscious at 1:55 PM on January 18, 2007

If enough people get smart and disciplined enough to game this system for their own profit, the practice would be discontinued by the company.

Yes, and that's eventually what happened in the case of those long distance company checks.

Another alternative is that legislators could make this sort of thing illegal.
posted by grouse at 2:04 PM on January 18, 2007

this is something that most all (?) credit card issuers participate in

I've never received one from my credit card company, USAA. Maybe I'm on their extra-grouchy list.
posted by The corpse in the library at 2:19 PM on January 18, 2007

Complain to your state's consumer affairs office. It's cheezy, and they should make it illegal.
posted by theora55 at 2:32 PM on January 18, 2007

There are definitely multiple mailing lists at a credit card companies. One for your bill and many others for various crappy offers. (Of course they may even sell your name/address to others. It's fun to make minor variations in your contact info. e.g. use full middle name, use "apt" instead of "unit", etc. and then see who's trading your info.)

i have a CitiBank visa and every few months I get a book of blank "cheques" that I can use. Of course, if I actually used one I would then be paying something like 25% interest, so they really are just a trap for the ignorant.

Your post reminds me that I need to bitch to Citibank to get off their marketing lists. thanks.
posted by kamelhoecker at 3:33 PM on January 18, 2007

i deposited one of these once and was able to cancel the service before they charged me anything, but since then I've decided it's not worth my time to try to deal with it.

But you could take it as a challenge and as long as you're organimized enough, you could probably make a bit of cash depositing these checks and then opting out within the 30-day trial period...
posted by jacobsee at 9:24 AM on January 19, 2007