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How credit-card companies can fight online scams: Roseman


Barrie Zwicker thought he had received an email from Bell Canada, his telecom provider, offering “an exclusive reward” for participating in a short survey.

His reward was two skin creams, which cost him $ 6 in postage charges. But when he didn’t return them after 14 days, he found himself automatically enrolled in a subscription deal in which new products arrived every month.

Zwicker, a retired journalist, realized that he had fallen for a slick scam.

“It happens that my wife had been saying she needed something for her skin. So it was a ‘perfect storm’ of her wishes and my insufficient attention,” he said.

They nicked me to the tune of $ 398.44 that I’ll try to get back. My skin is glowing right now — with anger.”

After he wrote to me, I helped him get the money back from President’s Choice Financial, which arranged for the merchant to give a refund of the unauthorized charges, said PCF spokesperson Lana Gogas. If only all credit card issuers did so without being notified by the media first.

The free-trial scam, where victims are tricked into believing they will be sent a product sample as a reward for doing a survey, pops up at the websites of many reputable companies.

“In November alone, we received complaints where Bell, CIBC, Cogeco, Costco, Derytelecom and Shaw have had their names misused,” says Daniel Williams, senior fraud specialist at the Canadian Anti-Fraud Centre, which is managed by the RCMP, OPP and Competition Bureau.

A demand to pay a small shipping fee with a regular credit card — instead of a prepaid credit card — may indicate that the company plans to charge more than an initial fee, Williams explained.

“These offers usually contain a tiny ‘Terms and Conditions’ button, which if found and opened may reveal all that the consumer is actually ‘agreeing’ to.

“The terms and conditions may indicate that the suspect company is based in Latvia or Cyprus — even if the product is being shipped from a Canadian address.”

Williams pointed to another issue. What is in the containers that customers receive?

“Even if the product is a brand name, that branded company may have nothing to do with the offer. Should you be putting a product on your face from a company you have reason to distrust?”

Why do credit-card companies keep doing business with these unscrupulous online retailers, rather than cutting off their ability to charge purchases to customers’ Visa and MasterCard accounts?

Rick Rennie, head of risk at MasterCard Canada, said merchants are required to communicate any terms that involve recurring payments. Cardholders must accept these terms separately from other terms, such as by checking a box or clicking a “submit” button.

If a merchant complies with the rules, the cardholder may not be eligible for reimbursement. It’s impossible to prejudge outcomes before all the facts are known and considered in each case, he said.

Visa Canada said it works to detect and address merchants that generate an excessive amount of fraud or disputes. But in a situation where a cardholder expressly authorizes charges by agreeing to terms and conditions and providing personal information to a merchant, it is not fraud and does not fall under the fraud guarantee.

Visa’s advice:

Here’s a story that shows how credit-card issuers can do a better job of looking after a customer’s interests.

When Bruce Gemmell ordered a skin care product promoted by TV host Dr. Oz, Scotiabank Visa’s security department called him. He was told that his $ 30 order had already been charged to his card, but for $ 400 — plus an automatic refill shipment every month until cancelled.

“The person from Visa security suggested we make a conference call to the company. He would help me reverse the transaction, arrange to return the goods and get a credit to my account,” Gemmell said.

“He actually took control of the call, even waited with me while on hold for at least 30 minutes. He left nothing to chance, making sure I got proper return information, including where and how to ship the goods (prepaid, insured, confirmation of receipt).

“I know many people complain about the credit card companies, but their security departments need to be acknowledged.”

Caveat emptor — buyer beware — only goes so far. Let’s stop blaming customers for not reading terms and conditions deliberately hidden from view and start working to release them from unfair deals.

Ellen Roseman appears each week in Smart Money.

TORONTO STAR | BUSINESS | PERSONAL_FINANCE

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