By David Lazarus, Los Angeles Times –
Julian Bermudez noticed something new on his latest Citibank credit card bill.
Down at the bottom, right beside where he’s supposed to fill in the amount of his payment, was a box to be checked if he wants to sign up for Citi’s Watch-Guard Preferred security service at a cost of $5.95 per month.
And the box was already checked.
“I don’t like someone saying yes for me,” said Bermudez, 37, of Los Angeles. “That’s so not cool.”
What’s also not cool is that you have to dig deep to find out who’s really behind this Watch-Guard Preferred thing and to discover that the company offering the ID theft protection has had to shell out millions of dollars in settlements with state attorneys general. More on that in a moment.
Citi’s website says Watch-Guard Preferred will help you if your wallet ever gets lost or stolen. It says you can receive up to $250 per year to replace lost or stolen items, plus up to $500 in a cash advance if you’re away from home.
You’ll also get six months of credit monitoring, as well as assistance in untangling the various hassles that ensue in ID theft cases, such as contacting entities you do business with.
A quick look at the fine print, though, reveals a few catches. For example, you may still have to deal personally with certain financial institutions, the Department of Motor Vehicles and the Social Security Administration — Watch-Guard can’t intervene on your behalf with these guys.
Also, that $500 cash advance depends on your having sufficient credit available on your plastic. No credit, no cash.
If the card you’re protecting with Watch-Guard is a debit or ATM card, you’ll face a liability of no more than $50 if someone else starts draining your account as long as you report the loss or theft within two business days. If not, you could be on the hook for as much as $500 of any losses from your account.
And then there’s this beauty of a condition, common to many financial-services contracts: “Watch-Guard Preferred may modify or terminate any benefit upon notice.” So much for peace of mind.
At least you’d think you can sleep well at night knowing that Citi has your back. But even though the fine print says Watch-Guard “is provided” by the bank, it notes that “all program features are provided and administered by WatchGuard Registration Services.”
Who? Here’s where an intrepid bank customer has to head off on safari.
WatchGuard Registration Services isn’t owned by Citi. It turns out to be a subsidiary of a company called Trilegiant, which is itself a subsidiary of a company called Affinion Group, which is itself owned by a pair of private equity firms, Apollo Management and General Atlantic Partners.
Got all that?
Connecticut-based Affinion describes itself as a leader in “comprehensive customer engagement and loyalty solutions.” That basically means they run the programs that frequently nail bank and credit card customers with recurring monthly fees.
According to the Better Business Bureau, Affinion operates dozens of such programs, including Elite Excursions, AutoVantage Gold, Buyers Advantage, Privacy Guard, Travelers Advantage, HealthSaver, Cheap Tickets Gold, Digital Protection Plan, Discount Shopping Club, Discount Travel Club, Everyday Values Gold, iWatch, SecureAll, Wallet Security Plus and, yes, Watch-Guard Preferred.
“We offer a wide array of protection services through a wide variety of banks,” acknowledged Mike Bush, an Affinion spokesman.
In 2006, Affinion agreed to pay $14.5 million to California and 15 other states to settle allegations that the company deceived consumers into paying for various membership programs.
In 2010, Affinion agreed to pay $8 million to New York to settle allegations that the company billed consumers for discount clubs without obtaining prior consent.
Bush said the settlements “were about marketing practices that had nothing to do with our ID theft protection products.”
Well, that’s a relief.
So let’s get back to that pre-checked box on Citi’s credit card bills.
Emily Collins, a Citi spokeswoman, said the pitch was included on the May statements for “a portion” of the bank’s roughly 21 million North American credit card accounts. She declined to specify how large or small a portion we’re actually talking.
“An accompanying statement insert illustrated that if a customer wants to enroll, they should sign below the X,” Collins said. “And should they change their mind, we cancel their enrollment and credit them appropriately.”
I asked if this was the most straightforward way of selling Watch-Guard. After all, the pre-checked box and the spot for an enrollee’s signature are right beside where a customer has to fill in the amount being paid. Some people might think they have to sign as part of the bill-paying process.
And why explain things on a separate insert that people might not even look at? Why not include right on the bill that by signing your name, you’re enrolling in Watch-Guard?
“We apologize that some customers may have found this message confusing, and are always listening to feedback as we work to ensure that it’s clear and simple for customers to find the information they need,” Collins said.
Perhaps for this reason, or perhaps because I raised a small stink, she said Citi won’t be using the pre-checked box for Watch-Guard any more. That’s a step in the right direction.
Collins also said the Affinion/Trilegiant connection isn’t disclosed because Citi’s contract is with WatchGuard Registration Services (an Affinion/Trilegiant subsidiary).
I guess they figure customers will similarly appreciate the distinction.