Charging You For Things You Don't Buy: Preacquired Account Marketing

Tens of millions of consumers have fallen prey to “free” trial offers and membership clubs offered by preacquired account marketers. These companies insert themselves into your everyday transactions, hoping to trick you into letting them charge your account.

In a soon-to-be published law journal article, University of Minnesota Law School professor Prentiss Cox details how preacquired account schemes work, and says we should get rid of preacquired account marketing (PAM) entirely.

PREACQUIRED ACCOUNT MARKETING: THE MEMBERSHIP CLUB

Most PAM involves a FREE trial membership!!! offer. If you do not cancel within the trial period, you become a paying member (surprise!). The trick is that you never give preacquired account marketers your account number.

They are able to charge your account through arrangements with banks and merchants that partner with them. For example, you may not realize that the “Everyday Values” club offer in your Budget car rental packet is a separate company, Trilegiant. If you cash the $9.25 check from Budget’s Everyday Values package, Budget will bill you and send the money to Trilegiant—minus a small fee.

MANUFACTURING CONSENT

Consumers who fall victim to PAM are generally unaware they have bought anything from the PAM company. In part, this is because all they have to do is get your “consent” to start the free trial offer. But “consent” here does not mean getting you to say “yes, I would like to purchase this product” or handing over your account number. More often, it just means getting you to say your birth date.

You may notice when that monthly fee appears on your account statement, but if so, you are not the PAM company’s victim of choice. Like a good consumer predator, PAM’s hope you are the kind of inattentive consumer who will not notice one more monthly—or yearly—fee that shows up a month or more after the “transaction” originally occured.

BAN PREACQUIRED ACCOUNT MARKETING

Because PAM is deceptive by nature, Cox advocates adopting the Uniform Consumer Account Control Act, which prevents anyone from handing out access to your account. Instead, you would get to decide what charges you authorize by explicitly authorizing them yourself.

The Invisible Hand of Preacquired Account Marketing [SSRN]

Sam Glover is a consumer rights lawyer, enemy of shady debt collectors, previous Consumerist contributor, and writes the Caveat Emptor blog. His column appears monthly on Consumerist.

(photo: Celeste)