One of the time-tested tricks used by negative option marketers is a "rebate" check, usually made out for a very small amount.
The consumer thinks it's free money, but by endorsing and cashing the check, the consumer "agrees" to enroll in some program that charges a monthly fee.
In Iowa, hundreds of consumers who deposited a so-called "rebate" check for $3.25 found themselves being billed by the "Credit Card Protection Agency, Inc."
"We are sending a notice today to 490 Iowans that they can get an immediate refund if they wish," Attorney General Tom Miller said. Most refunds will range from $89 to $139.
Miller said a Consumer Protection investigation determined that hundreds of thousands of Iowans received official-looking mail labeled REBATE CHECK ENCLOSED.
"Consumers who endorsed and cashed the $3.25 checks usually didn't notice fine print that enrolled them as members of the Credit Card Protection Agency, Inc. -- and obligated them to credit card payments," Miller said.
"The core deception was that CCPA never adequately disclosed the fact that cashing the purported rebate check would result in a membership and credit card charges," Miller said.
Miller said his office's concerns were resolved through a formal, written agreement with CCPA called an Assurance of Voluntary Compliance which provides for the refunds and prohibits similar practices in the future. CCPA is based in Lanham, MD.
"This case shows again why it is so important for consumers to study their credit card statements every month," Miller said. "Many questionable schemes exploit the fact that busy consumers may pay their credit card bills without examining all the charges carefully."
