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The Sad Truth About The Budget Trilegiant Scam


This is Part Four in my series on the Budget/Trilegiant Scam that I have been investigating.

In part one, I told you about the solicitation I received, in the form of a check, from Trilegiant, to join a specious “membership club” in which they would charge my credit card “on file with Budget”.     In part two, we learned more about Negative Option Billing and Pre-aquired Account Marketing.    Since then, I have been trying to verify which credit card Budget has on file for me.    In Part Three, I discovered that Budget representatives have no way of determining what credit card they give out to the Trilegiant/Affinion scammers.

The Big Picture Emerges

I would like to think that such obvious scams as negative option billing and pre-acquired account marketing would be illegal, but they are not.  I would also like to believe that supposedly reputable merchants, such as Budget Rent A Car would not give your credit card out to scammers, but they do.     It would also be nice to imagine that credit card companies would prohibit their merchants from giving your billing information out to scammers, but that is where this story gets strange.

I have been corresponding with a representative from American Express, as it was my American Express card that I used for my last Budget rental.    I pointed out to her that their publicly available Merchant Guide seems to prohibit exactly what Budget and Trilegiant are doing.  The most relevant statements I found were the following:

In section “3.3, Prohibited uses of the Card”

Merchants must not accept the Card for any of the following:

illegal activities and/or fraudulent business transactions,

sales made by third parties or Entities conducting business in other industries

Section 3.4 states:

Merchants generally must not disclose Cardmember Information, nor use nor store it, other than to facilitate Transactions in accordance with the Agreement.

Finally, Section 8.3 states:

Merchants must, and they must cause their Covered Parties, to:

store Cardmember Information only to facilitate Transactions in accordance with, and as required by, the Agreement

What Does This Mean?

For a non-lawyer, I am pretty good at interpreting legalese, and this seems pretty clear cut to me.    These companies are blatantly  violating their merchant agreement with American Express and other credit card processors, and they have been doing so for a long time.  According to Mark Ashley of the blog Upgrade Travel Better, this has been going on since at least 2005.

My contact at American Express informed me that this issue had been addressed in a recent Senate hearing.   At that hearing, Professor Prentiss Cox, the author of the report on pre-acquired in the Harvard Journal on Legislation presented the case against pre-acquired account marketing.    You can read his testimony here, which is very similar to his journal article that I summarized in Part Two of this series.     Another witness was Ben Edelman, an assistant professor at the Harvard Business School in the Negotiation, Organizations & Markets unit.    You can read his statement for the record and refer to his website has a wealth of information about this subject.

On his website, he reaches the same conclusion that these companies are violating their merchant agreement with American Express:

American Express’s Merchant Reference Guide prohibits the automatic transfer of customers’ card numbers. American Express rules provide that “Merchants … must not disclose Cardmember Information… other than to facilitate Transactions in accordance with the Agreement” (p.7) (emphasis added). No provision of the agreement authorizes a merchant to transfer a customer’s card number to another merchant. Furthermore, for a card-not-present charge, a merchant “must … ask the Cardmember to provide: … Card Number” (p.12) (emphasis added). No provision authorizes a merchant to obtain a customer’s card number in any way other than by asking the customer to provide such number. Thus, post-transaction marketers violate American Express policies when they obtain customer card numbers by making copies from other merchants.

I never received a direct answer addressing how corporations can get away with violating their merchant agreement, but perhaps Professor Edelman will.    He wrote a letter to American Express’s Executive Vice President and General Council, stating, in part;

“American Express need not sit idly by the wayside while its rules are flouted, to consumers’ detriment and to the detriment of the trust and reputation of the American Express network. I look forward to American Express taking action to protect customers from these important problems.”

If  Professor Edelman of Harvard University cannot receive a response from American Express, perhaps Senator John D. Rockefeller of Virgina, the chairman of the Senate Commerce Committee can.   He sent a letter to the CEO of Amex in an effort to get some answers as to why they allow this practice, one that is actually prohibited by their merchant agreement.    He also tried to determine how much money Amex is making off of the merchant fees it receives from these types of transactions.

To be fair, Visa and Mastercard also have similar rules in their merchant agreements, yet they inexplicably continue to allow this practice to continue.   They too received similar letters from Professor Edelman and Senator Rockefeller.


Until such time as these practices are outlawed, there are three legs that must be held up to make this deceptive trade practice feasible.   In addition to the original recipient of the consumer’s credit card information, and the “membership club” operator which charges the consumer, the credit card company itself must permit this kind of transfer of credit card information.

Like Professors Edelman and Cox, I feel it is time for American Express, MasterCard, and Visa to put an end to these outrageous practices.    So long as they continue to allow pre-acquired account marketing, they share a healthy dose of the blame.

There are millions of victims of these scams, which have stolen billions from hard working Americans.  Until the major credit card companies decide to enforce their existing merchant agreements, I can only conclude that they are willing accomplices.


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