In the free-to-pay variant, you might get a few weeks free. But unlike the Mickey Mouse Club, you don't even get a cool hat. You just get monthly bills and find it a royal pain in the neck to get your money back.
Yes, Virginia, it is "very true" that websites are sharing your credit card number with third parties that bill you for products you didn't order and club memberships for clubs you didn't join. But, you say, "I just clicked on a "special offer" popup and immediately closed the horrific page of junky offers. I had no idea they could, or would, enroll me for looking at a page for two seconds. They can do that?"
Yes, websites could and yes, they would. And they have for years (my previous blog). But maybe, as part of this investigation and the renewed Congressional oversight of the financial system, the old problem of "pre-acquired account telemarketing" will finally be solved.
The 1999 Gramm-Leach-Bliley Financial Services Modernization Act was supposed to fix a lot of things. It was supposed to remove barriers that prevented financial firms from becoming giant one-stop financial supermarkets that would create synergies, boost competition, offer consumers choices, lower prices and make America strong. How's that going for you?
In response to a rotten privacy scandal involving Memberworks and U.S. Bank, first uncovered by the Minnesota Attorney General, GLBA was also supposed to stop banks and other firms from sharing your credit card, debit card and even checking account numbers with "trusted" marketing partners without your consent. Who needs identity theft? An identity thief didn't steal your information and sell it. Your bank had it already and sold it.
Just as its consolidation of the banking industry didn't work out, GLBA didn't completely solve this problem, either, so after pressure from the state attorneys general, the FTC made changes to the Telemarketing Sales Rule to further limit the seamy practice of "pre-acquired account telemarketing" as explained in these supplemental comments of the Minnesota and Illinois Attorneys General. As the Minnesota comments make clear, it isn't just hard to avoid being signed up without consent, it's hard to cancel.
Some financial institutions have a “hotline” system so that consumer calls can be transferred directly from the customer service center at the financial institution to the retention department of the preacquired account seller. As one bank told its customer service representatives: We prefer that cardmembers contact the Business Partner directly when
attempting to cancel. However, when a call comes into [Bank], we will attempt to re-route the call to the Business Partner via an abbreviated warm transfer, i.e., we introduce the caller and then the Business Partner handles the call.
Unfortunately, GLBA and the TSR include only limited protections against pre-acquired account telemarketing and related "free-to-pay" scams. Let's hope Senator Rockefeller's investigation leads to more financial privacy reforms, including on the Internet.
Believe it or not, Vertrue even has a page warning about pre-acquired account telemarketing, even though that's its game.
More links:
My testimony from a 2002 Senate hearing on privacy and Gramm-Leach Bliley. Other pro-privacy witnesses at the hearing included the Minnesota and Vermont Attorneys General and Phyllis Schlafly, head of the conservative Eagle Forum. Among the industry witnesses was John Dugan, now head of the obscure, but powerful, federal OCC (previous blog).
An article from the Multinational Monitor about Memberworks and U.S. Bank.
New credit law will regulate Freecreditreport.com, a classic free-to-pay scam.
Well. as you can see, I am so excited about this investigation, this blog could go on and on...
