There are a lot of ways that businesses squeak through the door of legally sufficient, while staying far outside the realm of generally fair. One of the areas that comes up repeatedly as a source of customer discontent is the free trial offer tricks companies pull on unsuspecting consumers.
Free Trial Offer Scam
The free trial offer scam generally relies on a disconnect between what the legally agreed upon terms in the fine print state, and the general understanding that a reasonable person has about what a free trial is.
For most people, a free trial means that you get to try something out for free. Everyone knows that there is no such thing as a free lunch, however. Most people understand that the point of the free trial is to get you to sign up for the paid version going forward. What most people don’t notice, is that they actually already signed up for the paid version when they agreed to the free trial.
In other words, you aren’t really getting a free trial. What you are really doing is signing up for a full subscription with the first month free, and a limited free cancellation period.
That doesn’t sound as good does it? No wonder companies bend over backwards to make sure it sounds like a free test instead.
The trick works like this:
- Sign up for free trial
- Give a credit card number — often, the real purpose of this is hidden under some sort of carefully crafted impression that is necessary for “verification” or to “prevent fraud.”
- Do as much as legally possible to keep
suckercustomer from noticing that part of the agreement for the free trial is that they will automatically be billed to continue on using the paid service.
Most free trials are for one month, or 30 days. On one hand, this sounds like a reasonable amount of time to use a service to see if you like it. On the other hand, this is about the amount of time it takes for someone to lose track of something and forget to cancel. Remember that next time you think about how great that free month will be.
The worst offenders charge for a whole year at once and make that charge non-refundable. In other words, that one month free trial can turn into a one year paid subscription with a simple missed date. The most unscrupulous companies make it hard to cancel during the trial period so that even if you do remember, you might not get it cancelled anyway. Others “helpfully” suggest that you keep using your trial benefits right up to the last minute in hopes that you’ll slip up and forget to cancel later.
Technically, none of this is illegal. All of the details are dutifully explained in fine print somewhere, and by excepting the free month, or whatever, you must say that you understand and agree to all of the fine print.
How To Avoid Free Trial Scams
The best way to avoid a free trial offer scam is to skip it.
If you don’t need the service, or there is no way you are ever going to use the paid service, no matter what the free trial is like, ask yourself what you are getting out of the free trial that makes a potentially costly headache worth it. Do you actually want or need the service offered? If not, just don’t sign up for the free trial.
The easiest way to know whether or not to sign up for a free offer is to remember it isn’t a free offer, it is a subscription with one month free. Now do you want to sign up?
If you really do have a reason to try something out, here is how to avoid free trial offer scams:
- Read all the fine print. Pay particular attention to when and how you have to cancel to avoid being charged.
- Do not give a credit card number. — It is easier to ignore a bill than to deal with a charge on your credit card.
- Use a limited credit card number. — If you must give a credit card number, provided a limited one. Many credit card companies allow card users to create a temporary card number for use. Often, there can be either a time limit, use limit, or a money limit, or all three. Generate a temporary number and set it to expire as soon as possible. Also, set the limit to a low amount, $1 if possible. Then, use up the amount or number of charges before the trial offer expires and the charge kicks in. That way, the charge won’t go through.
- NEVER give a bank account number — Bank account access is a terrible idea. Not only do you not have the same rights as with a credit card, but the damage caused can be even greater. That subscription charge will not only take your money, but might leave you with a lower balance than you thought, and plenty of overdraft fees to boot. While you can easily cancel a card, closing a bank account can be a big ordeal, especially if you have other accounts and services linked to that account.
- Set an alarm or appointment — Put an appointment in your calendar and set another one online or electronically reminding you to cancel BEFORE the deadline. Cancel at least a few days in advance to avoid any nasty surprises or complications.
Legitimate Free Trial Offers
Legit free trial offers do exist. Most of these do not ask for a payment amount and will cancel your membership or subscription automatically if you don’t renew. In this case, the worst that can happen is that you might get calls or emails “reminding” you about the great service you didn’t sign up for. At least it won’t cost you.
Even in this case, be sure you read all the fine print and make sure you aren’t giving up something important to you.
Use common sense and watch out for the common tricks and you can enjoy the benefits of freebies and try out new services you might enjoy.
I write this personal finance blog because I like writing, I have real, professional experience in finance, and I like to help people. I also know that when I read a lot of the financial advice out there, it is either, too complicated, too oversimplified, or flat out inaccurate. This isn’t too surprising, because dealing with [...]
The deal where Yahoo is buying Tumblr got me thinking about a question that I get asked whenever there is a big merger or buyout between companies. Often, when one company buys another company, the buying company’s stock price goes down in reaction to the news. Why does the acquiring company stock price go down so often? [...]
In 2008, Microsoft offered to buy Yahoo. This is what so-called, “activist shareholder,” Carl Ichan wanted all along, not to rescue the company or turn the company around, but to make a quick profit by selling it. Of course, those members of Yahoo’s board who had own shares much longer than Mr. Icahn, and those [...]
I’ve been getting questions about reverse mortgages lately. It’s not surprising. Reverse mortgages are one of those financial planning tools that are very useful for a specific purpose, and for specific people, that has, unfortunately, been sold aggressively to others. Not all reverse mortgages are scams, but you have to understand what you are getting [...]
The most recent jobs report shows not only did the US economy create more jobs in April than expected, the number of jobs created in February and March were revised upward as well. This takes some of the steam out of the negative talk about the lower unemployment rate being only about workers who have [...]
There has been a lot of news about Apple stock lately. From the company’s swoon from an Apple stock price in the 700s down to the 400s in just months, to the company’s recent earnings report, to the new Apple plan to issue debt to pay shareholders dividends and buyback stocks. Is this good news [...]
The world of investing can seem black and white, even though nothing could be further from the truth. Particular investments made for one purpose by one investor are made for a completely different reason by another investor. Furthermore what is a “good investment” for one investor is flat out dumb, for another. This is what makes [...]
Employment numbers, or unemployment numbers depending upon your perspective, are a very important metric for the U.S. economy. As such, investors watch monthly employment reports released by the government very closely. But, why is the rate of employment, or unemployment, so important to the economy and Wall Street? At the very macro level, the American [...]
Don’t forget (as if you could) that your federal income taxes are due on April 15 in 2013. For the past two years, taxes were actually due on April 16th, thanks to weekends and a holiday last year in Washington D.C. No such reprieve this year, Monday April 15 is the income tax deadline for 2012 taxes [...]