"Many consumers have complained of being charged for products or services they didn't knowingly agree to buy," Miller said. "It seems to happen most often when telemarketers offer free trial offers -- and then begin charging consumers' credit cards automatically when the trial period ends. Many consumers don't realize that a solicitor already may have access to bill their credit cards, and that they will be billed automatically unless they cancel the product or service during the trial period. We think some telemarketers are using this situation to deceive consumers," he said.

"Our position is that First USA/Bank One and other banks have important obligations to protect consumers if they sell their customer lists to telemarketing companies," Miller said.

First USA/Bank One entered a multi-state agreement that it will:

• Approve all scripts and marketing materials, and prohibit deceptive solicitations.
• Prohibit customer charges without express authorization of the account holder.
• Require clear and conspicuous disclosure of the separate identity of a marketing company if the script makes reference to First USA/Bank One.
• Require very clear disclosure if a free trial offer requires cancellation to avoid charges.

First USA/Bank One entered the detailed agreement with 28 states and Puerto Rico. It will pay $1.3 million to the states for the cost of their investigation. It did not admit to wrongdoing. FirstUSA/Bank One, based in Delaware, has tens of millions of credit card customers and says it is the nation's largest issuer of Visa cards. The states entered a comparable agreement last March with Citibank, the nation's largest card issuer.

The investigation revealed that since the mid 1990s First USA/Bank One received a percentage of sales made by companies selling various products and services to the bank's credit card customers. In some cases, for example, telemarketers promoted free trial offers for buying club memberships or credit card "loss-protection" plans. When the trial period ended, some consumers did not realize companies would continue to charge their credit cards.

Be Wary of "Free Trial Offers"

Miller advised consumers to be on the alert if a telemarketer offers them a free trial offer for some product or service.

"Consumers often tell us they agreed to a free trial offer, but did not knowingly agree to a purchase," Miller said. "They spot it when they notice an unexpected item in their bill and are surprised to learn they supposedly authorized the purchase. We believe sometimes there is outright deception. At a minimum there is confusion," he said.

"Some consumers consent to a free trial period assuming it is harmless. They assume they will have to authorize any payment -- not realizing the solicitor already has access to bill their credit card. Sometimes the company mails a notice mentioning the obligation to cancel, but it may well be discarded if it is not expected and looks like a junk-mail solicitation," he said.

The problem often arises with "cold" calls from telemarketers off lists of credit card customers, Miller said. It also can arise when a consumer calls to order a product or make a reservation, gives a credit card, and then is solicited to try a "free trial offer" on a separate product or service, such as a buying club.

Tips for Consumers:

"The States are taking action so credit card issuers will do much more to protect their customers,' Miller said, "but consumers always should take measures to protect themselves as well."

• Be wary of telemarketer "free trial offers." Get the details: Will you be billed automatically if you don't cancel? How and by when must you cancel? Will you receive a mail notice? Remember, telemarketers already may have access to place a charge on your credit card.
• Watch your mail carefully. Sometimes cancellation notices look like junk mail and you might discard them without reading and canceling.
• Examine your credit card bill every month (and also your checking account and telephone bills.) Watch for unauthorized and unexpected billings -- and dispute them immediately.
• File a complaint with the Attorney General's Consumer Protection Division if you feel you've been deceived. (Hoover Bldg., Des Moines, Iowa 50319. Call 515-281-5926. Web site: www.IowaAttorneyGeneral.org - click on "protecting consumers.")

The 28 states (plus Puerto Rico) entering the agreement are: AZ, CA, CO, FL, HI, ID, IL, IN, IA, KS, KY, MD, MI, MS, MO, MT, NV, NM, NY, ND, OH, OK, OR, PA, TX, VT, WA, WI, plus Puerto Rico.

- 30 -