Lurking among the 72 billion credit- or debit-card transactions Americans carry out each year, in a financial purgatory between legal and fraudulent, a class of “grey charges” with spooky names such as Zombie and Phantom suck $14.3 billion out of people’s pockets, according to a study by Israel-based personal finance protection company BillGuard.
Such grey charges – fees that, though legal, are deceptive, unwanted or unexpected – prey on the bank accounts of unsuspecting victims, who often don’t realize they agreed to the charges by signing off on fine print when making a purchase.
As electronic payments have become more ubiquitous, more and more sneaky charges have worked their way into people’s bills. Because they are usually small charges, however, they often go unnoticed or undisputed, and eventually add up to a substantial total. The average annual cost for the 35 percent of card-users who incur grey charges amounted to $215.
“This data has quantified what most of us intuitively know to be true; merchants profit greatly, at the expense of cardholders, when we don’t check our bills,” said BillGuard founder and CEO Yaron Samid.
“Improper disclosure of sales and billing terms crosses a red line of ethics.”
According to the study, the most common offender is the “free-to-pay” grey charge, in which a customer accepts a good or service for little or no charge, unaware that it is part of short-term deal. After the trial period ends, the costs shoot up, and go straight to the credit card. Customers paid out $6.1b. in such charges in 2012, according to the study.
“Phantom” charges, in which an additional product or service was rendered with the intended purchase, sometimes by a third party, vaporized another $2.6b.
Nearly a billion dollars were spent on service fees and extra fees on luxury items, while socalled “Zombie” fees, charges for services that continue after they’ve been cancelled, gobbled up over $826 million.
BillGuard co-founder and chief technology officer Raphael Ouzan said its services can help people contest and retrieve about half of the unwanted charges.
“Bill checking for most people is a long arduous task that most would prefer to avoid,” he said.
To that end, the company launched its first iPhone app on Thursday, which alerts users to suspicious charges on their cards and helps them sort through, classify and dispute them.
It uses crowd sourcing to figure out which charges are legitimate, and which are not; as users notice and mark unwanted charges, BillGuard raises a red flag to other users that something might be amiss.
That’s comforting; knowing there is a team of people to help fight your personal financial zombie apocalypse makes the task seem less daunting.