If you’re recovering from a bankruptcy filing, trying to get out of debt or otherwise attempting to improve your finances, there’s nothing quite as frustrating as thinking you’re doing well spending-wise, only to find unexpected charges on your credit card bill.

Now, thanks to a new law passed at the end of December, your chances of hanging on to your money when you shop online just got a little better.

The “Restore Online Shoppers’ Confidence Act”

Here’s a summary of what the new law requires of online vendors and why Congress decided to pass it.

  • Certain types of online transactions now illegal: Specifically, third-party, post-transaction vendors cannot charge (or try to charge) a customer for any good or service UNLESS the customer explicitly consents to the transaction and provides the appropriate account information and the marketer provides the full terms of the transaction.
  • Online transfer of customer data now illegal: The second provision of this consumer protection law is that online vendors can no longer share consumer information with each other. In other words, if you buy a book from Amazon, it cannot legally share your credit card number with any other company trying to sell you something – you must provide the number yourself.
  • Negative-option sales now illegal: Finally, the new restrictions outlaw the practice of so-called “negative-option” sales offers. This means that offers that require you to actively uncheck the “yes” box in order to opt out of a purchase are no longer legal unless the vendor meets the criteria outlined in the first bullet and offers customers an easy way to cancel the transaction.

So why did Congress decide that such protections were necessary?

Recurring Charge Scams from Online Vendors

In recent years, one scam that has cost consumers millions of dollars they didn’t want to spend has functioned by essentially doing exactly what the new law prohibits. The scam works like this:

  • You make an online purchase. After you’ve “checked out” and completed your first transaction, you’re offered what looks like a great “deal.”
  • You click on the link. By clicking on the link provided, you are generally taken away from the web page of the company from which you made your first purchase.
  • You “sign up” for whatever deal is offered. Some offers disguise themselves as “rewards” programs. All are deceitful in that they do not require customers to re-enter their credit card information (so few customers suspected they were being charged money) and most come with an automatic opt-in to some recurring charge.
  • You see confusing monthly charges on your credit card bill. Because online vendors could, prior to the passage of the new law, share customers’ credit card information online, they would and you would see unexpected charges each month on your bill (from the third-party web site that you thought was offering you a “deal”).

The new law is being lauded by consumer advocates, and could help prevent identity theft and help consumers keep more of their own money.

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