Using 'magic words' to get your money back

An exhibit filed this week with a new Senate Commerce Committee report should help consumers who believe they've been tricked into signing up online for "membership clubs" that then generate mysterious monthly charges on their credit-card statements.

This is a big problem.  According to the Senate report, three Connecticut companies - Affinion, Vertrue and Webloyalty - have charged millions of consumers more than $1 billion over the last decade "for membership clubs and services the consumers did not want and were unaware they had purchased."  Other companies have similar business models that originate with direct-mail or telephone pitches.

Typically, the unwitting "sign-up" occurs after a consumer has willingly provided credit-card information to purchase something from the website of a company the consumer knows and trusts, such as Fandango, Priceline or US Airways. A common element is that the consumer is charged by the membership-club company without having taken the full series of steps that typically signify a purchase: providing a credit-card number, security code, and billing address. (You can see the new Senate report here, and my Inquirer column about the original report here. Along with the new report, Chairman Jay Rockefeller introduced a bill intended to crack down on practices he says are to blame; you can read about that here.)

Each of the companies says it has modified its practices since the Senate began its inquiry - as has Visa Inc, whose "data pass" procedures were a linchpin in making the tactics function. (Click here for a story about that.) Webloyalty responded with a statement saying it believes that its "current enrollment and post-enrollment policies and procedures meet virtually all of the requirements of the proposed legislation."

But what may be most interesting in the new report is its focus on what happens to consumers who complain and demand refunds.  The report says company reps were trained to quickly offer to cancel the unwanted membership but resist offering refunds - with one exception: 

Magic Words: Each company instructed their call center representatives not to issue refunds to consumers, unless the consumers mentioned certain key words like "attorney general," "Better Business Bureau," or "bank representative." These policies were designed to satisfy those consumers who were most likely to create additional "customer noise" and reputational damage for the companies. Consumers who did not mention the "magic words" did not receive full refunds.

The report even provides the transcript of one such actual call, showing how a supervisor's resistance-is-futile attitude suddenly melted.  To see the transcript, click here.

Many consumers know to threaten to dispute such charges with their bank or to complain to consumer-protection officials, the attorney general, or the BBB. But the Senate report is a great reminded of why - and how - it can work for you. Sometimes, the response is written in a company's own scripts.