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Buying Club Memberships

If you join a "buying club," you may be agreeing to purchase merchandise or services automatically at regular intervals - often monthly - until you cancel.

If you accept a free offer, you also may find yourself being billed for a product or service you never ordered. Sometimes, if you agree to a "free trial" offer it activates a bill for magazines, CDs, or some other product that is delivered regularly. These are called continuity plans, and they can end up being very expensive.

When a caller makes you an offer, listen carefully. If you don't understand the terms, ask the seller to repeat them. Write down important information, like the customer service telephone number or address.

Questions to ask a caller offering a free trial or a buying club membership:

  • Is the free trial offer related to a membership, a subscription, or an extended service contract?

  • Do I have to contact the company to avoid receiving any merchandise or services? If so, how much time do I have? What is my deadline?

  • Who do I contact to cancel? How do I cancel? By letter? By phone? By email?

  • Will I get other products associated with the free trial offer or the buying club? If so, will I have to pay for them or pay to send them back if I don't want them? How long do I have to decide before incurring a charge?

  • How do I stop getting additional merchandise or services?

  • Is there a membership fee? If so, is it refundable?

  • Will you automatically bill my credit card for the fee or the products or services?

  • Who is offering the trial — you or another company? What is the name and address of the company?

Gifting Club "Gotcha"

Sometimes, people pay to join a "gifting club," billed in promotional materials as a private club with members eager to help new friends - often from within their own neighborhood or church group. In reality, the clubs are pyramid schemes that must continually recruit. When the clubs don't attract enough new members, they collapse. Most members who paid to join the clubs never receive the financial "gifts" they expected, and lose everything they paid to join.

If you're approached about joining a club but you aren't sure if it's legal, the Federal Trade Commission reminds you to:

  • Consider that a legitimate gift has no strings attached and is not an "investment."

  • Remember that a gifting club is not legitimate just because the ads say that members consider their payments a gift and expect nothing in return. This is an attempt to make an illegal transaction look legal.

  • Be wary of success stories or testimonials of tremendous payoffs. Very few members of illegal gifting clubs or pyramid schemes ever receive any money.

  • Take your time. Don't buckle under to a high-pressure sales pitch that requires you to join immediately or risk losing out on the opportunity.

FTC Publications

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