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The truth about free trials

Tom Spring | Sept. 10, 2012
We handed over our credit card for 40 online trials, to find out the real cost of 'free.'

Waiting until the last day can cost you: Canceling on the last day of a free trial may result in charges. That's exactly what happened to me (by accident, according to representatives) with my free trial subscriptions to the Cook's Illustrated culinary website and to TrustFax.

Free trials may have costly conditions: With DVD-by-mail rental services such as Blockbuster and Netflix, you must send DVDs back within a certain window, or incur a charge. Blockbuster has a grace period of ten days past the end of membership; after that it charges you $20 per DVD plus shipping and handling. Netflix has a seven-day grace period, and then charges $14 for each DVD and $20 for Blu-ray discs.

The truth might be buried in the fine print: Companies providing free trials typically emphasize the benefits of the trial while downplaying the actual terms of the offer. The SociallyKnow free trial, for example, converts into paid monthly service with a three-month minimum membership requirement. So if you inadvertently allow your free trial to become a paid subscription, you're on the hook for three months of service.

Some services use scare tactics: Free trials of identity-theft protection services sometimes play fast and loose with the facts regarding the real threat of ID theft, the Consumer Federation of America found. "Some use data exaggerating the prevalence and risk of ID theft," the CFA's Susan Grant says.

When I called to cancel an ID-theft protection service from LifeLock, Rebecca, a customer service representative for the company, tried to retain me as a customer by citing U.S. statistics on identity theft. Eleven million people last year had their identity stolen, she told me. "That number has already been superseded this year," she said. When I asked her where the statistics she had cited came from, the LifeLock rep claimed that the source was the U.S. Federal Trade Commission.

However, I checked with the FTC, and a spokesperson said that those numbers were incorrect and that the agency didn't keep official numbers on ID theft. According to the U.S. Bureau of Statistics, 8.6 million households in 2010 (the most recent figures available) reported an attempted or actual incident of ID theft where a person's identity was used to open a bank or credit account. No preliminary figures for 2012 were available.

When I asked Tami Nealy, a LifeLock spokesperson, about the issue, she told me that the 11 million figure for ID thefts in 2011 should have been credited to a report by Javelin Strategy and Research, funded in part by Intersections, an ID-theft prevention firm. Nealy said that ID theft in 2012, as compared with 2011, is on the rise according to a number of different studies. But she also acknowledged that the representative had incorrectly described the data to me as having come from the FTC. "We apologize for any confusion her inadvertent cite error may have caused," Nealy said.

Economics of free trials

 

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