Gray Charges

AAA

DEFINITION of 'Gray Charges'

Fees consumers pay via credit card or debit card for unwanted subscription services that are automatically renewed or that are automatically converted from a free trial to a paid subscription. Gray charges also include hidden fees and billing areas. In total, gray charges constituted $14.3 billion in consumer spending in 2013, according to a consumer protection service called BillGuard.

BREAKING DOWN 'Gray Charges'

While gray charges are not illegal, they lie in a moral gray area. On one hand, consumers technically agree to these charges when signing up for the subscription; on the other, companies may be banking on consumers forgetting to cancel unwanted or unused subscriptions instead of relying on consumers’ active intention to continue paying for them. In addition, because gray charges are typically small, some consumers find it more trouble to cancel or dispute them than to continue paying them.

To avoid gray charges, consumers should read the fine print before signing up for a free trial or subscription using a debit or credit card. Check whether the merchant will automatically charge your card for the product or service when the trial period ends or the subscription is about to expire. Review your monthly statements carefully for unwanted or mistaken charges and contact vendors promptly to cancel unwanted purchases. For gray charges made to a credit card, it may be possible to get the charges reversed by submitting a dispute through the card issuer if the company initiating the gray charges is uncooperative.

RELATED TERMS
  1. Credit Card Teaser Rate

    A lower-than-normal interest rate that a credit card company ...
  2. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
  3. Luhn Algorithm

    An algorithm used to validate a credit card number.
  4. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
  5. Truncation

    The requirement mandated by the FTC for merchants to shorten ...
  6. Purchase Money Security Interest ...

    A security interest or claim on property that enables a lender ...
Related Articles
  1. Credit & Loans

    How To Dispute A Credit Card Charge

    Follow these steps if you've been ripped off or spot an error on your bill.
  2. Credit & Loans

    Make Money Off Credit Card Sign-Up Bonuses

    It's easy to benefit from credit card sign-up bonuses, but you have to know what you're getting into.
  3. Budgeting

    Five Credit Card Perks That Will Cure Many Headaches During Your Summer Trips

    It is a time when credit cards will become more than just convenient payment methods.
  4. Credit & Loans

    What You Need To Know About EMV Credit Cards

    Finally, the U.S. is beginning to move to EMV credit cards. Here's how they'll keep us safer and what they won't fix.
  5. Credit & Loans

    Fight Scams: Check Credit Card Accounts Online

    Credit cards do offer some protection against fraud, but here are 4 reasons to be vigilant and protect your credit score against scammers and mistakes.
  6. Credit & Loans

    Reasons You Should Use Your Credit Card For Purchases

    Paying for everything with your credit card will earn you rewards and protect you against fraud, among other benefits.
  7. Retirement

    Understanding Credit Card Interest

    Paying these rates can impact your disposable income and your investment returns.
  8. Budgeting

    5 Steps To Disputing A Credit Card Charge

    Federal and state laws offer protection to consumers when credit card charges are in question.
  9. Economics

    What Happens in a Default?

    Borrowers are in default when they don’t honor a debt, whether their failure is intentional or not.
  10. Budgeting

    The 7 Best Ways to Get Out of Debt

    Obtain information on how to put together and execute a plan to get out of debt, including the various steps and methods people use to become debt-free.
RELATED FAQS
  1. What are some examples of sneaky credit card charges to watch out for?

    Since it took effect in 2010, the Credit CARD Act has outlawed many of the sneaky fees that creditors used to use to pad ... Read Full Answer >>
  2. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  3. What types of liens are seen as good and which are bad for my credit?

    Creditors that allow purchases to be made through financing often require property to be pledged against a credit account; ... Read Full Answer >>
  4. What is the best way to start to rebuild your credit after a bankruptcy?

    Bankruptcies can be devastating to your credit score. Even worse, a bankruptcy will be listed on your credit report for between ... Read Full Answer >>
  5. What were the primary financial crimes involved in the ZZZZ Best case?

    ZZZZ Best was a company started by Barry Jay Minkow that claimed to be a carpet cleaning business. In fact, it was a Ponzi ... Read Full Answer >>
  6. Can a creditor sue me for a delinquent account?

    If a credit card account becomes delinquent, the creditor can sue the debtor for the balance as soon as the delinquency occurs. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  2. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  4. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  5. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  6. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!