Understanding gray charges
Understanding gray charges
They may be costing you money—here’s what you need to know to avoid them
What are gray charges?
Gray charges are monthly fees you’ve opted into without realizing it—like automatic renewal of a gym membership or a free trial that later converts to a paid subscription. If you don’t keep a close eye on your account statements, you may not notice that you’re being charged.
The monthly gray charge watch
Reviewing your account statement every month will keep you informed of the activity on your account. You’ll be able to track gray charges, fraudulent charges and refunds you’re due, and observe your general cash flow patterns.
Where do you find them?
Gray charges often start as free trials. Why do companies use them? Because once they get your commitment, they can keep charging you fees until you direct them to cancel the service.
Head off problems by reading the fine print (also known as the terms and conditions) and asking at sign-up whether there will be future charges.
5 common types of gray charges:
1. Free-to-paid: After a free trial period, the seller automatically charges a fee unless the consumer cancels or returns the goods.
2. Phantom: After a paid transaction, the consumer receives and is billed for an additional product or service from the seller or a third party.
3. Zombie: Subscription or membership that doesn’t end even after it’s canceled.
4. Unintended subscription: A one-time transaction turns into an unwanted
5. Membership: The consumer agrees to receive and pay for merchandise periodically unless the seller is notified not to send it. If the consumer takes no action, the seller charges the consumer and sends goods.
About 66.5 million American credit cardholders (one out of three) are impacted by gray charges.
How can you handle gray charges?
Contact the company to cancel any auto-renewing subscriptions or services you don’t use—and check back to confirm the cancellation has been made.
In 2012, gray charges cost consumers of all ages more than $14 billion.
Americans paid $6 billion in free-to-paid offers, which occur when a free trial is converted to a paid subscription.
Which charges can you dispute?
You may be able to dispute the gray charges and retrieve your money. Good candidates to dispute include:
• Un-honored cancellation requests
• Duplicate charges
• Billing errors
How can you dispute charges?
First contact the merchant to see if they’ll issue you a refund.
If that doesn’t work and the charge is on your credit card, consider lodging a written complaint with your card company. You typically have 60 days to dispute a charge, so it’s important to move quickly. The Federal Trade Commission website, ftc.gov, has a sample letter that you can use.
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