Answer by John Burnett:I take the view that, unless the consumer authorized the transaction in some way (perhaps as part of the agreement to purchase the samples or trials), the charges for the additional products are not authorized and would fall under Reg E's protections for the consumer. If Visa also provides a layer of protection, so much the better. If the consumer did authorize the second shipments then I agree that Reg E error resolution and protection under 205.6 would not be issues.
Answer by Andy Zavoina:It is common that a merchant offers something "for free" which the consumer accepts. In some cases there is a full disclosure that "if you don't cancel by X date, we will ship to and bill you for..." and in some cases it is hidden in the fine print. These claims are made often, but the fact is the consumer agreed to the terms. The customer may regret it later, but it doesn't change the authorization they already gave. Use of a credit card provides more protection for a consumer under Reg Z than they get under Reg E with a debit card. Reg Z is also concerned with consumer satisfaction of products or services purchased. Reg E is only concerned with whether or not the transaction was authorized.
First published on BankersOnline.com 3/30/09