Editor's ChoiceCategories Credit Type Issuers Blog

More On Negative Option Billing and Preaquired Account Marketing


Yesterday, I wrote about how Budget Rent A Car is giving your credit card information to scammers. I have been looking into this subject and found some interesting information.   By far, the most comprehensive analysis I could find was from the Harvard Journal on Legislation titled, “The Invisible Hand of Preacquired Account Marketing,” by Prentiss Cox.

It is a 45 page report, which is to be expected from a scholarly publication, but here are some of the highlights:

What Is Preaquired Account Marketing?

Preacquired account marketing is a sales practice that allows companies to charge consumers for services they do not know they ordered and do not use. The practice depends on a seller’s ability to access a consumer’s financial account without the consumer providing the account number to that seller. This is possible because the seller has paid a financial institution, or another seller who retains consumer account numbers, for the right to charge those accounts.

Who Do They Prey On?

Almost all of the consumers paying for the services sold through preacquired account marketing are unaware their accounts have been charged and unaware they have “purchased” the service.  Many of these consumers are charged because they have diminished mental capacity or struggle with the English language.  Preacquired account marketing works only because it singles out consumers who do not understand the solicitation or who do not notice the account charge….

What Products Are “Sold”?

…The product most commonly sold through preacquired marketing is a membership club. For example, preacquired sellers market home decorating clubs that provide discounts on furniture and programs sold as helping to prevent identity theft.  Preacquired sellers also frequently sell insurance policies and magazine subscriptions.


Preacquired marketing works like an invisible hand. Not the sort that magically aligns ers and sellers in equilibrium to promote maximum wealth. Rather, an invisible hand that selectively reaches into the pockets of consumers. These are not petty acts. Preacquired sellers are sizable companies who charge tens of millions of consumer accounts for billions of dollars in concert with some of the nation’s largest financial institutions and sellers of goods or services.

Preacquired account marketing should be banned. That it has not yet been prohibited in any form is consistent with a pervasive aversion in the last few decades to government rules that prohibit the use of sales practices or the sale of products. It is time to revisit, or at least qualify, the basis for that aversion in the context of this peculiarly deceptive form of marketing.

My Thoughts

If this sounds a lot like like the Budget Trilegiant scam, it is no coincidence.    In fact, this document refers repeatedly to Budget and Trilegiant.     Essentially, they are combining negative option billing with preaquired account marketing and a little phony check action thrown in to the equation to reach new heights of deceptive practices.

What Am I Doing?

As a consumer advocate, I am currently pressing my credit card company to find out why they have been permitting Budget to use my credit card information in this way.   I thought such “sharing” of my account information would be against their terms of service, and if not, it should be.   I will let you know their response as soon as I receive one.

What Can You Do?

1. Always scrutinize your credit card statements. If you are like me, you charge everything to your card in order to maximize reward points.     The downside is that it is easy to receive a statement that is several pages long, filled mostly with smaller transactions.

2. If you notice something unusual, investigate.     Don’t assume everything you don’t recognize is fraudulent.   Sometimes a legitimate charge shows up with a merchant name that you don’t recognize, especially when you make purchases over the Internet.   Google the merchant name and see if you remember the charge.    If you are still coming up blank, try calling them and asking about your purchase.    They should be able to tell you what you bought and when.

3. If the story doesn’t check out, make one attempt to get a refund. Don’t spend all day on hold, don’t put up with the run around, and don’t jump through hoops.    If the company is not a scammer, they should pick up the phone in a reasonable amount of time, say less than 15 minutes.    Then, they should quickly reverse all of the charges.    Many scammers are “soft scammers” that are hoping you don’t call, but will quickly reverse the charge when you do to stay off of the credit card processor’s radar.

4. Contact your bank and ask for a chargeback. Unfortunately, not all scammers are “soft scammers”.     Some are “hard scammers” and will make life difficult for anyone who tries to get a refund.  Don’t play their game, just go straight to your trump card, a credit card chargeback.   The burdenf is on the merchant to prove that you authorized the charge.     Tell your credit company that you did not authorize the charge, and they should remove all charges from that merchant quickly.

5. Make sure all charges are reversed It is likely that you may have been charged many times by the same merchant.  Remember to ask you bank to tell you of any instances of this merchant charging your credit card.   Any action you take should be against all charges the scammer issued.

And whatever you do, don’t cash that “check”!

Go To Part Three of the series: Budget Has No Clue Which Credit Card They Are Giving Out To Scammers

The series continues with Part 4, The Sad Truth About The Budget Trilegiant Scam.


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