If you haven’t heard of negative option billing, you are not alone.
This sales tactic continues to charge consumers for products, in some cases indefinitely. Unless you demand to opt out of the additional purchase, the seller automatically takes your lack of response to mean you want to keep buying their product.
Many consumers have unknowingly made the payments and lost hundreds or thousands of dollars.
Maple Ridge resident Linda Larocque learned about negative billing after her credit card was declined when she tried to purchase medication needed as a cancer survivor.
“We use that Visa to keep me alive,” she told Global News.
“I have to take drugs every month and it costs a total of $800 a month. If I don’t take those drugs… I’ll end up in hospital.”
It all started on Facebook when a pop-up ad appeared for Endure Beauty Services face cream for just $4.95.
“I was trolling, scrolling and checking out what my friends were doing and this thing popped up saying you want to try some samples?”
She thought she was getting a great deal, but then two weeks after the first container of face cream arrived, she got a second one that she didn’t request.
As Larocque was calling Visa to find out what was happening, another face cream arrived at her doorstep.
“I called up Visa and that’s when I found out how much money had been put on my credit card,” she told Global News.
Larocque was hit with a $630 Visa bill. Visa refunded her only after Global News got involved.
“I was devastated…we can’t afford this…we have one income. We lost a lot of money and we are down to one income..and I feel stupid.”
Negative option billing is legal
“It is legal,” said Evan Kelly from the Better Business Bureau, “but it is definitely questionable sales tactics.”
Endure Beauty System received an “F” grade from the Better Business Bureau after they received dozens of complaints from customers against the company’s advertising and sales tactics.
Kelly said these companies are able to do so because they have their terms and conditions on their website, but he’d like these companies to make very clear to consumers when they are enrolled in negative option billing.
“Some of these companies make it very difficult to do that,” added Kelly.
Global News could not find the terms and conditions for Endure Beauty System on its Facebook page, but they were available on the company’s website.
Laws surrounding negative option billing
“It is shady,” said civil litigator Chris Carta. ” I don’t think we’re going to be able to put a stop to it entirely…the best thing people can do is just be aware of how they can protect themselves.”
Carta recommends reading up on the “Business Practices and Consumer Protection Act.”
In terms of the legality behind this business tactic, Carta said, “It’s one of those grey areas. Most of these companies aren’t following these requirements of the business practices and Consumer Protection Act and by not following it that contract is illegal. They get away with it when people don’t know their rights.”
According to the Government of Canada Financial Consumer Agency, “all communications seeking your consent must be clear, simple and not misleading.”
Parliament passed Bill C-276 in 1999 to prevent cable TV companies from automatically charging customers for newly launched channels, but the bill excludes online orders.
READ MORE: Direct Energy reverses decision on negative-option contract changes
How to avoid being automatically charged
The Better Business Bureau is warning consumers about pop-up ads and encouraging people to read up about a company before making any purchases.
“We should be doing our research on a company before we make some of these purchases especially before we start putting our credit card out in the online world,” said Kelly.
Larocque is hoping her story will help prevent others from falling into the same trap she got caught in.
“I just want people to know and not let it happen to them.”
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