I'm taking a break this week from my usual mortgage-related writing to share a cautionary tale.
About two weeks ago, I received an email advertisement on a topic in which I had an interest – enough to watch a video touting the contents of a book on the subject. After 10 or 15 minutes of watching, I decided I did not want to buy the book, closed the video and thought no more about it.
Until the other day, when I received a monthly statement from one of my credit cards. The statement had a $37 charge I did not recognize from a firm identified as www.softwareprojects.com. I went on the site and was immediately greeted with a "Hi Jack," showing a book I allegedly ordered, the same book touted by the video that I had rejected. The site displayed the date of my alleged order and an order number plus a link to the book. The link would allow me to download a copy of the book that I hadn't ordered! However, in a tone of sweet reasonableness, I was assured that:
"If you do not like the product for any reason and would like to cancel your order and get a refund, please reply to this email. All of our products come with a 60-days, no questions money back warranty."
So I did just that. I emailed them to cancel my order and received an immediate confirmation that they had done so and would notify the credit card company. If one ignores the fact that I did not order the book in the first place, that was great service.
In addition, they told me that if I had ordered several products, they would send me "a separate email per each product so that you can keep your download links and confirmations organized." Sure enough, another email arrived showing that I had purchased another book last year. That was also a fiction, but I had failed to notice the charge on my credit card bill at that time and had paid it. That $37 I will not be getting back.
The question that puzzled me is how they got my credit card number, which they had to have to bill me? Since I did not order the book on either occasion, they didn't get the number from me. My surmise is that they got the number from another firm from whom I have knowingly made online purchases.
The firm appears to be a distributor of software products of many other firms. If their policy is to charge based on inquiries or expressions of interest as well as concrete orders, as they did in my case, having multiple clients generates a scale economy. The more clients they have, the greater the likelihood that a consumer who contacts them but does not place an order will have disclosed a card number to one of the clients.
The clients benefit from this practice – one of them made $37 from me last year less whatever they had to pay SoftwareProjects.com as a sales commission. Does that make them complicit? The one that produced the book that I didn't buy but paid for would have to be deaf, dumb and blind not to realize what was going on. On the other hand, SoftwareProjects.com also distributes products of Microsoft, Adobe, Intuit and Symantec, and it is inconceivable that such firms would knowingly be involved in such a sleazy practice.
On drafting this article, I immediately wrote SoftwareProjects.com to ask about their access to credit card information and their billing policy. Needless to say, I have not received an answer.
The moral: If you buy stuff online and pay with a credit card, always verify every item on your credit card statement.
ABOUT THE WRITER
Jack Guttentag is professor emeritus of finance at the Wharton School of the University of Pennsylvania. Comments and questions can be left at http://www.mtgprofessor.com.