"Many consumers don't realize that a solicitor already may have access to bill their credit cards, and that they will be
billed automatically unless they cancel the product or service during the trial period," Miller said.
"Sometimes consumers are deceived, and we are working to change industry practices," he said. "But consumers can
protect themselves, too. Be alert if someone offers you a free trial offer."
Miller said Citibank, the nation's largest credit card issuer, has agreed with Iowa and other states on numerous steps to
protect consumers from alleged unfair and deceptive practices by telemarketing firms that use Citibank's customer lists
and credit card information, including approving all telemarketing scripts and prohibiting customer charges without
express authorization. Iowa and other states also are urging the FTC to issue rules that will protect consumers.
"Credit card issuers often sell their lists to separate telemarketers, including the ability to post charges to someone's
account," Miller said. The banks usually receive a percentage of sales. The companies sell various products and services,
such as buying club memberships and credit card protection plans. In some cases, telemarketers promote free trial offers
for 30 or 60 days, but then post a credit card billing after the free trial period expires - unless the consumer specifically
takes action to cancel the product or service.
"Consumers often tell us they did not knowingly agree to the purchase," Miller said. "They notice an unexpected item in
their bill and are surprised to learn they supposedly authorized the purchase. We believe sometimes there is outright
deception. At a minimum there is confusion."
"Some consumers consent to a free trial period thinking it's harmless," Miller said. "They assume they would have to
authorize any payment -- not realizing the solicitor already has access to bill their credit card. Sometimes the company
mails a notice mentioning the obligation to cancel, but it may well be discarded if it is not expected and looks like a junk
Miller said the problem often arises with "cold" calls from telemarketers off lists of credit card customers. It also can
arise when a consumer calls to order one product, gives a credit card, and is solicited to try a "free trial offer" on a
separate product or service, such as a buying club.
Action by State Attorneys General:
Miller said 27 states recently entered an agreement with Citibank, the largest credit card issuer in the country, with major
reform measures to protect consumers when Citibank provides its lists to other companies for solicitations. According to
the detailed agreement, Citibank will:
Approve all scripts and marketing materials, and prohibit deceptive solicitations.
Prohibit customer charges without express authorization of the account holder.
Require clear and conspicuous disclosure of the separate identity of a marketing company if the script makes reference
Require very clear disclosure if a free trial offer requires cancellation to avoid charges.
"Companies have responsibilities when they sell their customer lists to telemarketers," Miller said. "This agreement
recognizes that, and we hope it begins to set a good standard for the industry."
Miller said many States also are uniting to send a formal "Comment" to the Federal Trade Commission strongly
supporting the FTC's plan to issue a revised "Telemarketing Sales Rule" that will better protect consumers. The new
FTC rule would require a telemarketer to obtain a consumer's billing information from the consumer rather than from
banks or other companies.
Tips for Consumers:
"The States are taking action, but consumers always should take measures to protect themselves as well," Miller said.
Be wary of telemarketer "free trial offers." Get the details: Will you be billed automatically if you don't cancel?
How and by when must you cancel? Will you receive a mail notice? Remember, telemarketers already may have
access to place a charge on your credit card.
Watch your mail carefully. Sometimes cancellation notices look like junk mail and you might discard them without
reading and canceling.
Examine your credit card bill every month (and also your checking account and telephone bills.) Watch for
unauthorized and unexpected billings -- and dispute them immediately.
File a complaint with the Attorney
General's Consumer Protection Division if you feel you've been
deceived. (Hoover Bldg., Des Moines, Iowa 50319. Call 515-281-5926. Web
- click on "protecting