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EFT Claims for Online Services-No Shipping Address

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Question: 
We have had several EFT claims recently that involve online debit card transaction to dating sites and adult sites. Both of which may have a trial membership period where the customer signs up for very little and then in 7 days or so gets hit with a heftier fee, and then many more. The customer claims they did not authorize the transactions. Our employee contacts these merchants; gets verification the customer signed up for the trial membership, the date they signed up, the name on the account, the email, and possibly the address associated with the account. My concern with these types of sites is that there may not be a shipping address as they are online services, so we can't say there was a shipment to their physical address. If the customer is claiming they didn't sign up for the services, yet the merchant is providing us with all the other information that coincides with our customer's information, is that enough to still deny the claim or should it be paid based on the customer's statement?
Answer: 

Delivery in an online world doesn't have to involve a shipment, since lots of "stuff" is delivered electronically. Sites of the type you mention may include language on their webpages that provide for a low- or no-cost initial membership or purchase, with future charges for membership renewal or additional services at a greater cost unless the consumer cancels the initial membership by a deadline. The automatic nature of the future charges is often not "clear and conspicuous."

Some of these scams are described as "negative options" by the Federal Trade Commission in a 2016 blog article at https://www.ftc.gov/news-events/blogs/business-blog/2016/09/negative-opt...

If the consumer authorized the initial transaction (you may be able to view the ad on the problem website) and the subsequent charges to the debit card, as evidenced by the merchant's providing the consumer's name and other information, the transactions were authorized, and the bank can deny the consumer's Regulation E claim.

First published on 11/01/2020

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