By the time Jane Hrabak, 59, figured out what the unfamiliar charge on her credit card bill was for, she was out about $1,000. A "buying club" she doesn't recall joining had been draining first $10, then $20, a month from her account. "I felt so dumb," says the Belle Plaine, Iowa, commercial artist.
In 2009 the U.S. Senate Committee on Commerce estimated 35 million Americans had been enrolled in such buying clubs since 1999. These clubs aren't brick-and-mortar retailers like warehouse clubs: For a membership fee, they offer discounts on products sold by other firms. Consumer advocates charge that they use deceptive marketing tactics to lure members. When shoppers click on a pop-up that offers a discount for an online purchase, accept a "free trial" from a telemarketer, or cash a small check award mailed to their home, they often miss the fine print that says they've agreed to a monthly fee ranging from $9.95 to $19.95.
"I estimate consumers lose about $2 billion a year to these kinds of companies," says Iowa attorney general Tom Miller, who sued two of the largest firms that run these clubs.
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