Negative option billing persists despite laws
Negative option billing makes people furious. Using this tactic, companies add new charges without your consent and assume you accept them unless you decline.
Direct Energy, a well-known home service company in Ontario, recently tried to impose extra fees for water heater rentals and gave clients less than a month to opt out. It caved in quickly after a public protest.
Isn't negative option billing illegal? That's a question I often hear. The answer: Only in some cases.
When Rogers Communication started charging for new cable TV channels without getting consent, Parliament passed a law in 1999 to stop cable TV suppliers from doing automatic billing.
Few laws passed
The federal government is now telling financial institutions they can't add new services, such as credit card insurance, without first making sure you want them.
The Ontario government outlawed negative option billing in 2005. But there's a big loophole that affects many people. You still have to pay for goods or services you agreed to — even if you did so only unconsciously.
Here's a typical scenario. You ask a lawn care company to look after your weeds and you sign an invoice with lots of small print. Only when the company keeps visiting do you realize you agreed to regular lawn maintenance.
You may get roped into inadvertent contracts when you agree to a free sample offer online. Once you give a credit card number to pay for shipping, you start getting monthly shipments in the mail. The fine print said you were agreeing to a subscription.
Credit card companies have a zero liability guarantee for unauthorized transactions. But you may be accused of giving your authorization, since you didn't read the pages and pages of terms and conditions that flew by online.
In a Visa Canada survey of web shoppers, just one in four said they read all the online text. Almost half said they skimmed it and 27 per cent read nothing at all before accepting a tainted offer.
Paul Messinger, a University of Alberta professor, ordered flowers online and clicked a box to save 15 per cent. His credit card data went to a separate company that kept billing him for three years. He lost more than $400.
In a study published last year, Messinger said people rarely read the many screens they have to click through online. He'd like to see more consumer protection.
If you order anything online, be extra vigilant in reading your credit card statements. The monthly amounts may be small enough to fly under the radar. And don't deal with unknown suppliers unless you check them out carefully.