‘Gray charges’ hit unaware card user
Do you ever notice a few charges on your credit card statement and you can’t figure out why? If you haven’t, you’re lucky. According to a recent report from BillGuard, about a third of all credit and debit card holders report “gray charges” — and probably lots more don’t report them because they haven’t noticed them. Typically gray charges are small amounts, averaging a total of $61, but they add up to $14 billion a year. Gray charges are not strictly a travel problem, but because credit cards are so central to travel, this warning is especially useful. The BillGuard report cites 11 types of gray charges.
Aggregate “free-to-pay” charges account for close to half of the total. “Free to pay” means charges for goods and services that were “free” when you first got them but automatically switch to a paid status after an introductory period. Typically, the switch to pay status may be poorly disclosed at the time of purchase; the seller starts billing you without notifying you of the change in status of your account; and the seller provides no information about how to cancel the transaction. Several other gray charges are closely related:
“Unwanted auto-renewal fees” you get when you sign up for something (cellphone international roaming feature, anyone?) for a set period that the seller keeps renewing without asking you. Some travel-program “membership fees” do the same.
“Zombie” fees and “membership fees” for some service that keeps billing you even after you think you’ve canceled.
“Phantom” gray charges are among the most pernicious: Those are the charges you encounter when you buy something from a supplier and receive some additional service you didn’t specifically order. Those charges were in second place.
“Hidden fee” is another basic category, and one well known to travelers. Although airline fees are no longer hidden, hotels still stick us with “resort fees” that they don’t include on their initial price display. A reader recently reported an unexpected fee of about $45 for a “premium station” surcharge on a European car rental that was charged separately at the end of the rental and not disclosed by the agent on a phone reservation. This one was pretty easy to spot on the credit card statement, but not all such hidden fees show up with specific identification. Given the importance of online side-by-side price comparisons, you can expect the problem of hidden add-on fees to become worse, not better.
If you aren’t careful, these fees can amount to some big bucks. BillGuard reported that about one-third of cardholders in its sample paid $100 or more in gray fees during 2012, and almost one in 10 paid more than $500.
The obvious next question, of course, is, “How can I avoid gray charge scams?” The primary answer is equally obvious:
Scan your billing statements carefully and investigate any charge you either can’t recognize or cover services or products you thought you’d canceled. I’ve seen enough gray charges that I routinely look for details on any charge I don’t recognize.
Check with anyone else on your account who may have ordered something without telling you. Beyond that, you can often find out through the detailed transaction record. In other cases, you may have to Google whatever identification is posted. And if that doesn’t work, call the card issuer and ask.
Look for charges for something you think you’ve canceled, and follow up with the seller. If that doesn’t work, dispute the charge with your card issuer.
BillGuard has a vested interest in all this: It offers a free iPhone application that scans your accounts, uses its user base to help identify problem charges and automatically links to a questionable merchant to start resolving the problem. Check it out at billguard. com. Unfortunately for those without iPhones, it’s not yet offered for other smart devices.