Post-Transaction Marketing: It should be known as the “The Black Hole Club” as that’s what happens to your money-goes down a black hole!
Tom Spring wrote a great article about it at PC World using the headline Subscription Trap! Yes, a computer magazine writing consumer protection articles, cool huh!
Post-transaction marketing is a billion, yes, a billion dollar business.
This is the scenario. You are checking out after an online purchase. A little box appears. It suggests a great proposal-your email address for free shipping. You give them your email address, and they give you a reward. Great huh!
Things are fine, until a couple of months down the road when you notice a monthly recurring fees added to your credit card bill-”The Shoppers Club….”. And you think, “What’s up with that?” Well you probably used stronger language! Then you made the call to your credit card company to cancel whatever it was.
They told you to get in touch with “The Shoppers Club”. The “Shoppers Club” reminded you that you signed up with the service when you bought that “thingey” online a few months back. Now, to cancel the recurrent fee, and get your money back, you had to hand write a cancellation letter. After a couple of months, your refund arrived.
Of course at this point, you have put in 8 hours of time. Multiply that by what your “time” is worth. How much was that “free shipping”?
Most of these post-marketing charges are for “clubs” that’s are innocently joined. And apparently enough don’t cancel to make the industry tons of money!
The reason these marketing companies use “clubs” is that the fees are recurring. You will be paying 15 bucks a month forever or until you cancel your club membership!
These clubs are usually in the area of the original purchase, shopping clubs, exercise clubs….. Buy a plane ticket, and before you know it, you are a member of a “travel club”.
The club may have legitimate offerings, but according to consumer agencies, most members are:
- Not aware they are in the club.
- If they do eventually realize they belong to the group, rarely use the club’s services. Actually, one survey done by the industry itself, revealed less than 5% of the members ever use the service of the club.
Then why doesn’t everyone cancel. For some, it is just that they pay their credit card bill, without reviewing all the charges. If the bill is “close” to what is expected-they just pay it.
Others are embarrassed or too “busy” to bother calling or chasing down a $15 monthly fee. But of course to our readers, we know that equals $180 dollars a year. And if you are letting that kind of thing slide, what else is going on with your finances???
You might think that a consumer protection agency or other group might prevent this sort of thing from happening. And actually, the US Senate Commerce Committee investigated post-transaction marketing in 2009.
Several recommendations were made to the companies involved. However, only 8 companies out of 450 participating in post-transaction marketing transactions changed their technique to require customers to “opt-in” twice with their credit card information. This to make it more transparent that there was a separate service involved (ie club membership)-and a separate ongoing charge.
Tech-Crunch has this list of many companies and their revenue from Post-transaction marketing.
The three largest companies in the post-transaction marketing space are Affinion Group, Vertrue, and Webloyalty. All of these companies websites promote the benefits to both the retailer and the “customer”.
So what should you do, to prevent being a victim of post-transaction marketing?
- Buyer beware-pay attention to those offers at checkout-make sure the offer is what you think it is.
- Read the fine print-if you can’t read or understand all the details of the offer, that should be a sign to run away.
- Keep records of all your efforts, (calls, letters, emails) when you are canceling the service.
- Always review your credit card statements completely, even if the amount seems to be “about right”.
If you have the need for one of these ongoing services and think it was worth the recurring charge, let us know.
If you have fallen victim and had to cancel-was it easy or difficult to get your money back?
A shout out goes to one of my brothers, S., who suggested this topic!