BBB Says MyGallons.com "Omitted Fact" In Advertising, Has No Contract To Process Transactions

The BBB says its concerned about gasoline-hedging company MyGallons.com and its ability to live up to the advertising claims on its website. A spokesperson for the BBB tells us that the biggest “red flag” they’ve discovered is that MyGallons claimed (in their press release) to have partnered with US Bank. However, when the BBB called US Bank to confirm this, they found out that it wasn’t true. US Bank had discussed the opportunity with MyGallons, but had declined. According to the BBB, despite the fact that they have no contractual agreements in place to process transactions, MyGallons is still signing up new customers.

The BBB has added this warning to MyGallons’ reliability report.

The Bureau is concerned that the company’s advertising contains a material omission of fact. Specifically, while the website proclaims that any gas station in the US that accepts credit cards will accept the My Gallons Card, however the company has informed the Bureau that no contractual agreements to process the card have been made as yet.

Here’s the statement from MyGallons.com’s press release:

In addition to significant savings, MyGallons offers its members convenience and freedom as the gas redemption program uses the Voyager fleet network, owned by US Bank, which is accepted at over 95% of gas stations nationwide.

MyGallons.com’s, spokesperson, Greg Salsburg, told Consumerist that their partnership with US Bank was just for a “pilot program” and that they are currently in negotiations with another company. He said they expect to have a big announcement next week about their new transaction partner. He also said MyGallons is “comfortable and confident” that the deal will go through, and that current customers will not be affected.

MyGallons LLC [BBB]
MyGallons Provides Americans With a Solution To Fight Rising Gas Prices (Press Release) [Yahoo!]

Comments

Edit Your Comment

  1. Bourque77 says:

    Im shocked that the bbb is actually doing something useful.

  2. geoffhazel says:

    first

  3. geoffhazel says:

    dang

  4. Oooh a chance to participate in fee-laden pseudo-speculation with a sketchy company. Where do I sign?

  5. Is this the company I have been hearing advertising in the NYC area, I believe on 92.3? I think they promise to refund the difference between what you pay and what you agree to (something like 2.49) within a week. Seemed weird to me. I guess I should have paid more attention. And it wasn’t an ad for a dealership, they’re usually $.99.

  6. OK, I looked at their site, and this REEKS of a scam. A scam which will make them rich. This is step 1 off their website [www.mygallons.com] :
    Sign up and become a member of MyGallons. Similar to joining any other price club such as Sam’s, COSTCO, etc., there is an annual membership fee of $29.95* backed by our 100% money-back guarantee*:

    If you do not save money on at least one redemption throughout the subscription year, we will refund 100% of your first year’s membership fee. Upon signing up, your MyGallons Card will be sent to you. You will also receive additional cards that you can give to family members or friends to activate.

    So if I read that correctly if you buy one tank of gas, and they save you $1, you can’t pull out of the “contract”, and they keep either the $29.99 or $39.99. I hope I am wrong, are a lot of gullible people will be seperated from their money very quickly.

  7. ColoradoShark says:

    I’m not a lawyer but there are some that read Consumerist. Please clarify that “material omission of fact” in legalese is the same as what non-lawyers call lying.

  8. Dorgon says:

    I was pretty seriously considering this site as I’d love to save on gas, but some discussion somewhere (here?) pointed out that they had gotten their domain name after they said they had started their “pilot program.” It seems to me they rely a lot on this pilot program of theirs. Avoid.

  9. sleze69 says:

    Glad to hear that now after I signed up. Here’s some more wonderful info about MyGallons:

    - you have to pay an annual fee between $30-$40

    - you don’t receive your card for 1-6 WEEKS

    - you can’t see the price you will pay until you activate your card

    - you will get charged for the cost of the fuel if it is higher than the acceptible range of prices for you zip code…whatever that means

    I feel like I blew $30 and am getting ready to go into “refund my money or face a chargeback” mode.

  10. ludwigk says:

    Everyone knows that hedging can be amazingly profitable, but the weird thing about MyGallons is that, you’d think the only way they’d be able to make money is by the customer getting screwed with a poor trade (i.e. buying up a ton of gas at $4.15/gal, then the price goes down to $3.90). But the price of gas has been on the rise steadily for over a year, and it appears to only be going up.

    So, the assumption here is that “someone” is willing to gamble that gas will go down in price really soon, and take MyGallons, and its customers for a ride when it does, because MyGallons has to be buying future gas from someone.

    But of course, fraud is even more profitable than hedging gas, so maybe I shouldn’t try figuring out too much.

  11. Funny how this site has been getting HUGE press on Headline News and my local news outlets. I wasn’t really interested because the premise did sound too good to be true.

  12. Scuba Steve says:

    @Michael Belisle: Sorry, the speculation happened in the first thread, you’ll have to partake in a secondary speculation thread happening in this one.

  13. ludwigk says:

    @sleze69:

    - If you go over your prepurchased amount, you pay for the excess gas at market price + $15 overdraft fee.

    - If you have automatic refill, the card will automatically purchase more gas for you at market price when you go below 15 gallons.

    - Automatic refill carries a $1.95 processing fee.

    - MyGallons keeps your prepurchased gas money in escrow, then invests it in Money Markets and securities, with no need to pay you the interest.

  14. @Git Em SteveDave seeks Lego build buddy. How about you?: I apologize in advance if I called anyone who may have signed up for this “gullible”. I think the correct term in short time will be “victim”. Consumerist, me thinks you will get much use out of the “mygallons” tag.

  15. doctor_cos wants you to remain calm says:

    @ColoradoShark: I don’t think “material omission of fact” is by definition, lying. I think this term would more refer to not revealing everything about a deal (especially the bad parts), while ‘lying’ would be statements known to be false (lacking in factitude).

    Of course, we learned this from Star Trek.

  16. @Scuba Steve: I was in the first thread. I don’t understand what you mean by “the speculation happened in the first thread”.

    I’m referring to the sucker-born-every-minute version of a fake futures contract mygallons is offering (now with questionable honesty!), not commenters speculating about the company.

    Seems like most commenters recognize (sorry sleze69, get a refund posthaste) that the chances of losing money here are very high. The terms and fees are terrible.

  17. Crazytree says:

    @ColoradoShark: it’s closer to the definition of “fraud”.

  18. ConsumptionJunkie says:

    @Bourque77: I have to agree with you. The fact that BBB issued a warning WITHOUT any complaints on file is incredible. Their website shows zero complaints on MyGallons.

  19. Azmodan says:

    @ludwigk: Of course they keep your prepurchased gas money and earn interest on it. They are in this to make money and this is their best long term strategy to do that.

  20. ludwigk says:

    @Azmodan: My implication, which wasn’t really clear, was that between the money market interest and credit card fees, and membership, they don’t have to do anything else. They don’t have to find another institution taking a short position in gas prices, they don’t have to aggressively purchase to maximize your benefit. They can just push numbers and amounts around to make it look like you’re saving a few pennies per gallon every now and then, and play on people’s desire to lower their gas costs by any means, and just profit from people being some combination of lazy and sloppy.

    The real point is that their business interests do not seem to be aligned with the customer’s interest, or even delivering their core service to the customer, as far as I can tell. Of course they are in it to make money, but part of their business model should include the part where delivering a good service for their customers benefits them as well.

  21. chartrule says:

    if it sounds too good to be true it probably is

    seems to me that the only way these days to save on fuel costs is to buy in bulk with your own fuel tank and pump on site

  22. Ding, ding, ding.

    Buzz, buzz, buzz.

    My scam filter just went off.

  23. clank-o-tron says:

    @sleze69: “- you will get charged for the cost of the fuel if it is higher than the acceptible range of prices for you zip code…whatever that means”

    Oh ho… I think I’ve stumbled upon the crux of the scam (if I may call it a scam). It appears that they have a ‘cap’, so if gas in your neighborhood exceeds that, they charge you the regular cost of the fuel, pocketing all the fees you’ve paid them for this service. Is this like comcast’s secret bandwidth cap?

    Granted, I see the obvious case for this where gas goes up higher than they’ve speculated and they start to lose money… but it’s so vaguely worded that it’s basically a loophole.

  24. Azmodan says:

    @clank-o-tron: My interpretation was that if you are traveling and go to a state with significantly higher gas than what you originally paid for then they won’t cover it. Or, to stop them from being scammed. If you have a friend in Texas (or somewhere where gas is cheap) and you live in Cali (where gas is really expensive), you can’t just pay and have the gas card sent to your friend (and then forwarded onto you) and reap the benefits.

  25. @Azmodan: In addition to adjusting for a difference in price between your home area and where the card is used, there’s also a acceptable range of “current mygallons price” ± 10¢ within your home area. If you buy outside of that range, then they’ll credit or debit your account accordingly.

    But here’s another thing from their FAQ, previously mentioned by ludwigk:

    Over 80% of your pre-purchase amount is placed in an escrow account and invested in money markets and U.S. Government backed notes. The remaining balance is utilized for financial transactions to accomodate for gasoline price changes.

    Also, if you elect to withdraw your “investment” instead of buying gas with it, there are two possibilities: the lesser of the price you paid or the current price of gas. Hence, you can either break even or lose money. (That is, unless you can buy enough gas while the price is high to make up for all the fees. Gas hoarding, anyone?).

    Anyway, Thanks for the offer mygallons, but I am fully capable of investing in treasury notes and cash equivalents myself. And that way, I get to keep the earnings, fee-free.

  26. Chaosium says:

    @Bourque77: Agreed. The BBB isn’t really good for much of anything so it’s surprising that they’re doing this on their own volition.

  27. ChuckECheese says:

    This mygallons.com program looks a lot more complicated than my no-doc ARM. I say let’s wait and see.

  28. dirtleg says:

    It just seems fishy to me that anyone besides the oil companies would be planning to make money on gasoline sales at the retail level. I just don’t see what their business plan could be. I am smelling a rat some where. Or maybe this is the next sub-prime fiasco getting started up.

  29. Grrrrrrr, now with two buns made of bacon. says:

    Okay, so a group of shady investors get together..they need cash really fast (probably for buying oil futures!)…take money, promise gasoline….pay out a small percentage in gasoline, invest the rest…if things work out…they get rich…if things don’t, people will be left holding worthless pieces of plastic while the company files for bankruptcy. Meanwhile, they still have your money, initial signup fee, and all of the fees they’ve managed to charge you thus far.

    So even if gas goes up, they’ve already taken all the prepaid membership fees, pooled them and have already bought the next round of energy futures to stay one step ahead of the market.

    I admit to not understanding all the nuances of their contract, but if their profit-making strategy is that abstract, I wouldn’t touch it with a 10 foot pole.

  30. I think this is my main issue with the service: The plan is to offer a gasoline hedging service backed by transactions other than hedging gasoline.

    That’s like saying, “Give me $10 to buy apples today, and I will guarantee you a future supply of bananas.”

  31. Rachacha says:

    ***ONLY SPECULATION ALERT***

    I looked up their domain registration, and the site was registered for 1 year (beginning March 2008) using Domains by Proxy (DBP), sort of concerning on that fact alone, as a reputable company generally does not pay the extra money to hide their personal information, and I get concerned when companies only register sites for 1 year at a time.

    The .net and .org extensions were purchased on Tuesday of this week, .net using DBP, and the .org using a spam like gmail account in Ft Myers Fl. I saw in a news article that the company was based out of southern FL. Now I can’t be sure that the .org owner is the same as the .com, but the coincidence is concerning.

    That being said, in looking at the contract, it is reasonable enough to let you think it is legit, but just shady enough (My gallons can do this, we reserve the right to do that etc.) to make you think it is a scam. For now, I’ll keep my money in the bank and pay the higher prices at the pump.

  32. smarty says:

    Credit to Rachacha for the following because once Florida was mentioned, I went to Sunbiz.org to see who the owners of MyGallons are:
    [www.sunbiz.org]

    Basic Summary so far:
    -incorporated on 4/14/08
    -address MAY be a virtual office:
    [www.regus.com]
    -there is a .pdf file of the articles of LLC for the company

    Florida’s BBB site shows the same address:
    [www.bbbsoutheastflorida.org]

  33. MercuryPDX says:

    @Rachacha: The .net and .org extensions were purchased on Tuesday of this week, .net using DBP, and the .org using a spam like gmail account in Ft Myers Fl.

    Just speculation on your speculation, but it’s VERY possible these were purchased for Typo Squatting. Typing either the .org or .net leads to two different pages of advertising on two different domain registrars. If it was bought legitimately by the .com holders, both would be pointing back to the site you see at the .com address.

    As of this post, MyGallonsSucks.* and MyGallonsScam.* are also available in case any one wants to cash in on the inevitable hater sites.

  34. MercuryPDX says:

    And to further speculate, it’s fairly common for a start-up to buy a domain for one year because they tend to fold like a greeting card. You can always renew for 10 years after you make it.

    Using a anonymous service for domains can be seen as shady, but it’s also fairly common. A domain registry is similar to having a published phone number that’s not on the Do Not Call List.

  35. jackal676 says:

    Totally off topic, and I’m a jerk for doing so, but what the hell is with people trying to post “First” as the first comment? I really don’t get it. Who the eff cares? Why is this so common throughout the web? Maybe it would be interesting to post the first thoughtful comment on a message board topic (as that could guide the direction of resulting posts), but why do people seem giddy at the thought of being the first to post absolutely nothing?

  36. amandaemily says:

    I’ve been digging up info on this Steven Verona guy, and he seems to be quite the huckster – moving from state to state. First Ohio to Pennsylvania, to New Jersey and now Florida.

    Among the domains he owns that I’ve discovered so far (and has yanked offline as of the morning of July 3rd) include securasurf.com, pursuepeaceclothing.com, zenacon.com, advicefromalawyer.com and jewishjeans.com. If anyone has a hundred bucks to spare, you can find out what domains he owns exactly by searching for his email address at domaintools.com

    The mygallons.com domain was registered using his real name, but he changed it to private after the BBB report came out and reporters started to ask questions.

    Mr. Verona also appears to be a patent troll, he has the following patents issued to him that I’ve found so far:

    BEHAVIOR CARD GAME METHOD AND APPARATUS – 20080026349
    MEDIA POPULARITY CONTEST METHOD – 20080021774
    THIRD PARTY DATABASE SECURITY – 20070294403
    Portable multiple bar and other code display – 20070205286
    Receptacle illuminating device – 7246915
    Rollers for aerodynamic impact – 20070046067
    Personal data storage and retrieval device – 20060294270
    Self-leveling spoon – 20060288589
    Nail clipper retainer – 20060288580
    Data sharing among multiple web sites – 20060179111
    Countdown pricing process – 20060167767
    Receptacle illuminating device – 20050281019
    Removable billiard cue tip – 6890264
    Removable billiard cue tip – 20040082397
    Pool stick tip – D489104

  37. Snarkysnake says:

    On the one-in-a-trillion chance that this is not a giant scam…

    What happens when prices are falling ?

    It would seem that their business model only makes (marginal) sense when prices are rising. When they go down “todays prices tomorrow” don’t look so hot.(Their FAQ offers this sage advice-”wait for prices to go back up in the days and weeks ahead”)

    So,really, you are locked into the price you bargained for(And if prices drift down by 50 cents to a buck,a lot of folks will just ditch their card and shuck the whole thing meaning free $$$ for these guys).All in all,they can’t lose and you can’t win.

    Just buy your damn gas and use less of it. Problem solved.

  38. Rachacha says:

    @Snarkysnake:
    What happens when prices are falling ?

    My Gallons has a response to that question:

    Q What if prices go down?
    A Gas prices move up and down all the time. If prices drop you can wait for them to go back up in the days or weeks ahead.

    Assuming the business information that Smarty provided above is correct, a quick Google search shows that the owner is very active in his community, and has been a registered Public Accountant since 2007.

    I still am concerned about the legitamacy of this all, but if it is Legit, I certainly wish this guy the best of luck, it is a great idea, and I am pi$$ed that I did not think of it!

  39. Rachacha says:

    @Rachacha: I should clarify, I was speaking about Mr. Levison, not Mr. Verona that “amandaemily” was researching above.

  40. witeowl says:

    I heard about this on the local news, and something just didn’t sound right even then.

    I’ll stick with [www.gasbuddy.com] and reasonable hypermiling, thanks.

  41. Geekybiker says:

    Gas is pretty cyclical in price. Lower in the winter, and higher in the summer. Assuming this place is on the up and up you could nearly guarantee that you’d save money just by buying at the right time.

  42. trinidon2k says:

    I saw this on CNN the other day. Gerri Willis seems to think it’s a great idea. They did mention the BBB thing at the end, but they made it seem like it wasn’t a major concern. They had a couple of customer testimonials and they seemed pretty happy. They also interviewed the CEO and he said that they plan on making the most of their money from site advertising.

  43. Aesteval says:

    If this is established in a proper manner, then in theory it could
    raise gas prices entire on its own. If it’s pulling gas out of the
    market in any way at all, it’s just going to decrease supply. But for
    some reason I don’t see it as being a form of anything which would
    stockpile much in the way of gas.

  44. ArmchairEconomist says:

    This isn’t ‘Hedging’… and it isn’t meant to be profitable for anyone except for the owner of the site.

    Hedging implies that you are using this to reduce the risk of a particular transaction/investment. With this business model, my assumption is that you want to protect yourself against the risk of increasing gas prices. An appropriate hedge would give you the ability to decrease the risk of increasing gas prices, and the only way this model works is if gas prices are GUARANTEED to increase forever (this is the implication of the site, based on their FAQ answer to ‘what happens if prices go down: wait for it to go back up’.. if they were legit and committed they would offer to allow you to cash in your prepurchased gallons at the price you purchased it if it ever went down (they give it to you at which ever is lower: the price you paid or the current spot price.. meaning they keep the profits of the risk YOU TOOK.)

    In summary, the reason this won’t work, and doesn’t decrease the risk of increasing prices is simply that prices WILL go down, and when it does you have no protection (and this model gives you no benefit if prices DO go down.. the benefit goes to Mygallons.com).

    More analysis here:
    [armchaireconomics.wordpress.com]

  45. Snarkysnake says:

    Other schemes like this have been tried with commodities that were in the news for their skyrocketing price,luring in the suckers that don’t know any better…

    In 1984, a company (can’t remember the name)ran some expensive ads in USA Today and the Wall Street Journal offering a too good to be true price for the flavor of the month at the time – Silver. Silver was goin nuts.Up a dollar or two a day,doubling in a month etc…These assclowns made news by selling silver to yokels today for cash and promising to deliver it in 3 years. As sharp readers by now have probably guessed, when it came time to deliver the goods,these guys blithely declared Chapter 11 and made themselves scarce.Then there was another spate of articles about old coots that lost their life savings,living on Alpo,blah , blah,blah…Moral of the story-Trust no one. Even if they fire your righteous indignation about high gas prices,they are playing you for a sucker.This is a stupid idea.When it craters,you read it here first.

  46. Mozoltov, motherfucker says:

    Any of you guys heard of Radio Gas Deal, [www.radiogasdeal.com] ? I thought it was legit at first but it is one of those progranms where you sign up with your creditcard and you have to complete offers.