Chances are you're being hit with grey charges and you have no idea. To make matters worse, by the time you realize their presence on your credit card statement, you've already been charged for a few months or more.
After getting past the initial frustration that your account has been siphoned, you must now spend time trying to reverse or cancel the account to avoid further charges. This is often time consuming and frustrating, not to mention costly.
The average consumer may be tempted to ignore the charges, but removing and stopping the charges should be a priority. Here's everything you need to know about grey charges.
What are grey charges?
Grey charges can be found in (but not limited to) magazine and online game subscriptions, automatic renewals and free services that switched to premium paid services without your knowledge. Essentially, grey charges are charges that end up on your credit card statement without your knowledge or due to businesses using less than forthright tactics. Some companies use every trick to find their way on your credit card statement because they're banking on the fact that you're not paying attention during the sign-up process.
Sources of Grey Charges
The most notorious source of grey charges is the free trials that require your credit card for the trial. Well, if it's free, why do you need a credit card to sign up? This is because it is ultimately not free, and these companies don't want to miss a dollar should you forget to discontinue the service after the trial period is over. The trial is what gets you in the door and them on to your credit card bill every month. Securing your credit card information upfront ensures companies a consistent stream of subscription fees at your expense.
Other sources of grey charges include the following:
- Ghost subscriptions: Subscriptions you sign up for while completing a separate purchase during checkout.
- Nuisance charges: Charges you may have cancelled previously only to find that they are back on your credit card statement.
- Ghost renewals: While signing up for a subscription or trial period, the business purposely hides or does not display the renewal date in hopes of charging you unknowingly later on.
- Freemium (free) to premium (paid): A company doesn't expressly tell you when the freemium period ends or how much you will be charged.
- Cost creep: The initial cost for a service or product increases after a few months without your knowledge and, in some cases, your consent.
- Money-back guarantees: You order a product, are less than thrilled upon its arrival, but neglect to return it. Your account then continues to get charged until you do so.
How much are grey charges costing you?
Believe it or not, they can cost the average consumer $215 to $350 per year. On a monthly basis it may not seem like much, but over time, this adds up – especially when it happens across several credit card accounts.
In 2012 alone, grey charges cost U.S. credit and debit cardholders $14.3 billion, according to a study by the personal finance security service BillGuard. As you can see, this is a lucrative business practice at your expense. Seems sleazy, right? Without a doubt the practice is less than scrupulous, but in most cases, it is legal. Therefore it is up to you to become vigilant when signing up for a subscription or completing a purchase online.
How to Avoid Grey Charges
Grey charges often happen because consumers aren't paying attention when making a purchase. Companies depend on your lackadaisical attitude toward your money in order to show up on your credit card statement unbeknownst to you. You can combat these charges by being mindful and monitoring your purchases via your credit card statements on a monthly basis. Ask questions and read the fine print before going through with the transaction. Check your credit card statements and dispute the charges when necessary. Your credit card company will often reverse the charges if you can prove that you did not consent to the charges on a recurring basis.
Getting Rid of Them
Call the customer service number and discuss the charges with the representative. Ask them to show you where you agreed to the charges, and if they aren't able to do so, politely ask for a refund. If that doesn't work, then file a complaint with your credit card company.
Ginger Dean is a licensed psychotherapist and founder of the personal finance website Girls Just Wanna Have Funds.