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Better Business Bureau of Central Virginia says “Free Trial Offer” scams on the rise

From The Better Business Bureau of Central Virginia:

With many more people staying at home due to COVID-19, chances are they’ll encounter lots of internet “free trial offer” scams. While celebrities, credit card companies and government agencies have increased their efforts to fight deceptive free trial offer scams, victims continue to lose millions of dollars to fraudsters, says the Better Business Bureau.

“Subscription Traps and Deceptive Free Trials Scam Millions with Misleading Ads and Fake Celebrity Endorsements,” describes how free trial offers will use celebrity endorsement ads on social media to attract consumers to deceptive websites that charge a small shipping and handling fee, usually $4.99 or less, for a “free” trial of beauty or health products like skin creams or weight loss pills. The true cost of these free trials — ongoing monthly subscription plans — is buried in small print and behind links, if it’s disclosed at all.

“Free trial offers that are often scams have been around for years, but the COVID-19 crisis has given them new life and scammers new material to rip off others,” said Barry N. Moore, President & CEO of the BBB serving Central Virginia.

Free trial offers aren’t illegal. For example, many popular video streaming services often promote free trial offers. Enter now the scammers who’re now using fake free trial offers to take advantage of your desire for streaming services. BBB has received Scam Tracker reports that scammers are using social media to offer bogus free Netflix services. To receive a fake pass, those clicking on a link may be directed to provide personal information and send the offer to friends. Scammers are likely phishing for personal and banking information or to distribute malware.

BBB urges consumers to:

  •         Examine online free trial offers carefully
  •         Resist being swayed by the phony use of a well-known name
  •         Report free trial offer scams to BBB Scam Tracker
  •         Report losses to credit card companies. After the BBB free trial offer study, Mastercard and Visa issued new policies to increase transparency for free trial offers.

Free Trial Scams Reported to BBB 

Consumers filed more than 58,400 complaints and Scam Tracker reports to BBB in the U.S. and Canada in the last three years. The median loss for victims dropped from $186 to $140 since the study.

BBB Complaints/Reports on Free Trial Scams
2017 17,898
2018 18,940
2019 21,583

FBI Complaints Regarding Free Trial Scams

Complaints to the FBI’s Internet Crime Complaint Center (IC3) slightly decreased in 2019. IC3 found that the largest number of victims were over 60.

IC3 Complaints on Free Trial Scams           Losses 
2017 2486 $5,669,170
2018 1953 $7,436,104
2019 1517 $6,012,881

New Scam Tactics

Free trial offer fraudsters have developed new tactics. Previously, they usually sent shoppers to bogus generic consumer news articles or fake websites with familiar sounding names to make their pitch. Now they often copy the look of major media outlet websites, such as The Today Show, Good Morning America, and others, presumably to increase the credibility of the claims about the products.

Scammers also have expanded their efforts to use social media to draw in victims. An October 2019 investigation by Buzzfeed details one operation based in San Diego that convinced people to rent out their personal Facebook accounts to the fraudsters who used the accounts to place free trial offer ads. According to Buzzfeed, scammers used “overseas workers in the Philippines to manage its account rentals and legions of associated Facebook pages, and built up a network of stay-at-home moms in the US to recruit friends and family members to rent their accounts.”

Law Enforcement Efforts 

The study noted that while the FTC and BBB had done much to address the issue, only criminal prosecutions and international cooperation were likely to deter this type of fraud. Several actions have since happened.

23 state attorneys general have urged the Federal Trade Commission (FTC) to strengthen regulations to combat free trial offer scams.

FTC cases reported more than $1.3 billion in documented losses in the December 2018 BBB study. That total has risen to nearly $1.4 billion, thanks to settlements in the FTC’s cases against Apex Capital Group ($47.3 million) and Triangle Media Corp ($48.1 million).

In addition, the FTC amended the complaint in its Apex Capital Group case to add a Latvia-based payment processor as a defendant. Though the original defendants in that case have settled, this litigation continues.

The FTC has filed two new cases against an enterprise operating from Puerto Rico and AH Media. Both are in litigation.

In April 2020, the FTC issued full refunds to victims in a free trial offer case where the company was selling golf and kitchen gadgets.

The owner of the Puerto Rican operation has also been charged criminally in the District of Puerto Rico.

In March 2020, the Florida Attorney General obtained an Assurance of Voluntary Compliance with a Florida-based operation that shipped products for a number of free trial offer scams.

At least one class action case in federal court challenges the tactics of another free trial offer scam and cites the BBB’s study as support.

Credit Card Company Efforts

Credit cards continue to be scammers’ payment method of choice for free trial offers.

BBB urges credit card companies to do more to ensure victims receive chargebacks where key conditions are not adequately disclosed.

Since BBB’s study, Mastercard and Visa have announced new policies to combat free trial offer scams. Mastercard now requires merchants to get cardholder approval before billing after the conclusion of the trial. Visa adopted similar requirements that became effective April 18, 2020. Both companies continue to encourage victims to dispute questionable charges with the bank that issued their card.

Education and media 

Consumer education and awareness can help people avoid free trial offer scams. Media coverage resulting from the study includes ABC’s Good Morning America, NBC News, CBS News This Morning and Consumer Reports.

Those who have lost money to deceptive free trials need to challenge the charges on their credit cards and file complaints so they can educate others.

  •         Complain to the company directly. If that is not successful, call the customer service number on the back of your credit card to complain to the bank.

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