Question: While going through my credit card billing, I discovered a $26 charge for Consumer Reports. As a general rule, I do not charge magazine subscriptions so was baffled by the expenditure. It was for an annual subscription renewal. I never signed up for "automatic renewal." The customer representative said she could not refund me all $26 because I had already been sent one issue, but could receive credit for $24. I asked who gave the authority to charge my credit card and she said that Consumer Reports does "automatic renewal" routinely as a "convenience to the customer who may have inadvertently forgotten to renew their subscriptions." Is this legal?

Answer: Automatic renewal is not illegal, but the Federal Trade Commission requires sellers to inform the consumer about it clearly and upfront, receiving "implicit consent" before automatically billing an account and providing simple methods to opt out.

We contacted the Hawaii Better Business Bureau about your complaint and was pointed to the FTC’s explanation of automatic renewals and other "negative options" presented to consumers.

Hawaii does not have a specific statute dealing with "negative options," according to the state Office of Consumer Protection.

But, under its Trade Regulation Rule Concerning Use of Prenotification Negative Option Plans, the FTC "requires sellers to clearly disclose the terms of any such negative option plan for the sale of goods before consumers subscribe. In such plans, consumers are notified of upcoming merchandise shipments and have a set period to decline the shipment. Sellers interpret a customer’s silence, or failure to take an affirmative action, as acceptance of an offer."

The four types of negative options named by the FTC are automatic renewal, in which the subscription at the end of each billing period is renewed unless consumers specify not to renew; continuity of service, in which consumers will continuously be billed for and receive products until they opt out; free-to-pay conversion, in which a product will be free for a limited time, then consumers will be automatically billed until they opt out; and pre-notification, in which consumers will receive notices offering products or services, receive the items, then be charged unless they opt out.

While some businesses make these options clear, the FTC says that "very often" the information is hidden deep in the fine print or omitted altogether.

The BBB also pointed to the Restore Online Shoppers’ Confidence Act, a federal law that lays out new rules that might make these types of sales illegal unless certain disclosures are met.

Among the requirements: A consumer must be given the opportunity to perform an additional affirmative action before being automatically billed, such as clicking on a confirmation button or checking a box.

According to the BBB Code of Advertising, "An advertisement as a whole may be misleading although every sentence separately considered is literally true. Misrepresentation may result not only from direct statements but by omitting or obscuring a material fact."

If you were not given adequate disclosures about the automatic renewal, you can file a complaint with the BBB. Go to bbb.org/hawaii or call 536-6956.

BBB Tips

» Be sure you fully understand the terms and conditions before you buy.

» Remember to cancel on time so you won’t be (automatically billed) if it is a "free trial" offer.

» Watch out for pre-checked boxes that appear when you make your online purchase. These boxes might already be checked, and you must uncheck them to opt out.

» Check credit card and bank statements for any unauthorized or recurring transactions.

» Contact the business and ask for a refund, then contact your bank to stop future payments.

» Use prepaid credit cards to help to minimize unwanted reoccurring charges.

Write to “Kokua Line” at Honolulu Star-Advertiser, 7 Waterfront Plaza, Suite 210, 500 Ala Moana Blvd., Honolulu 96813; call 529-4773; fax 529-4750; or email kokualine@staradvertiser.com.