| Credit Card Hijacking is the term used when a | | | | traditional subscription based system such as paper |
| person’s credit card information is used for | | | | magazines where the subscriber has to periodically |
| undesired charges for goods or services where the | | | | proactively reauthorize the subscription, hence the |
| credit card owner has trouble reaserting control. This | | | | default is to not renew.) The most common |
| can occur in two major forms. | | | | subscription exit barrier is to not provide any online |
| Credit Card Hijacking by Identity Theft | | | | subscription cancellation mechanism at all, but to |
| The first form of credit card hijacking is basically | | | | instead require the user to cancel by telephone or by |
| identity theft, which is the deliberate assumption of | | | | "on-line chats". Such organizations often add the |
| another person's identity. Identity theft is usually the | | | | additional barrier of making any subscription |
| result of serious breaches of privacy and often | | | | cancellation information difficult for the user to even |
| involves the thief compromising a great deal of | | | | find, thus creating an additional delay in the subscription |
| financial and personal information allowing the thief to | | | | cancellation. This is very common amongst |
| open up new credit card accounts in the name of the | | | | ISP’s, who know the psychological barrier to |
| victim. | | | | making the call, which the subscriber anticipates will be |
| Credit Card Hijacking by Cancellation Barrier | | | | unpleasant, is very high. It also allows the marketing |
| The second form of credit card hijacking, which most | | | | organization to talk the subscriber into changing their |
| people have fallen victim to, is the continued charging | | | | minds and not cancelling the subscription. Another |
| of a person’s credit card for a subscription | | | | common subscription cancellation barrier is to have a |
| to goods or services no longer desired by the credit | | | | relatively long subscription period, a no refund policy, |
| card owner. This type of credit card hijacking was | | | | and to require the user upon cancellation to forfeit all |
| pioneered by major ISPs, credit monitoring services | | | | money covering the present subscription period. This is |
| and online dating services, is perfectly legal, and is still | | | | very common amongst online dating services. |
| common today in a wide range of subscription based | | | | This second form of credit card hijacking was created |
| goods and services. Credit card hijacking of this type | | | | by marketers who recognized that subscription based |
| came about as online subscription based marketers | | | | services generally have relatively low periodic billings |
| realized that traditional subscription systems, such as | | | | which will generally go unnoticed on any given credit |
| the annual subscriptions that paper magazines use, | | | | card statement. So what happens is that long after the |
| were an impediment to enrolling customers. A typical | | | | user loses interest in the subscription, they forget to |
| dial-up ISP, at US$24.95 per month, is US$299.40 | | | | cancel the subscription and because the periodic billing |
| annually. By breaking the subscription period into small | | | | is so low, they don’t tend to notice it on their |
| units like months or quarters, and allowing direct | | | | credit card statement. |
| monthly charging of the subscriber’s credit | | | | Credit Card Hijacking by Negative Option Billing |
| card, the psychological and economic barriers potential | | | | Negative option billing is the practice of sending goods |
| subscribers see are greatly reduced. | | | | automatically and billing the recipient unless the recipient |
| The issue which makes one subscription system a | | | | is proactive in declining the goods before they are sent. |
| hijacking of the credit card is not the mode of entry | | | | Negative option billing reverses the usual direcion of |
| into the subscription nor the billing interval, but the | | | | sales transactions. It assumes that unless you say 'no', |
| marketing organization creating barriers for the user to | | | | you've agreed to have bought the goods. This is the |
| easily cancel the subscription. Organizations which use | | | | common practice used in book clubs, record clubs, and |
| credit card hijacking as part of their marketing strategy | | | | magazine subscriptions with automatic renewal. Some |
| make online registration for the subscription easy, | | | | practitioners of negative option billing prefer to call it |
| enforce default automatic renewal policies, and create | | | | "advance consent marketing." |
| barriers to halting the subscription. (This is in contrast to | | | | |