The Invisible Hand of Preacquired Account Marketing

Abstract

Many of the nation’s largest financial institutions sell to direct marketers the right to charge their customers’ financial accounts. Major retailers, including well-known internet merchants, engage in the same practice by allowing direct marketers to charge the credit card or other accounts used by consumers to purchase goods or services from the retailers. This practice is known as preacquired account marketing. It results in tens of millions of consumers paying for services that they did not intend to order and do not use. Preacquired account marketing shifts the control of account charges from the consumer to the seller by circumventing short-hand methods used by consumers to signal assent to an account charge. The central thesis of the Article is that preacquired account marketing exists solely because it allows these sellers to sort out vulnerable consumers who pay for a service without their knowledge. Data from public enforcement actions and investigations strongly support this thesis. Many consumers whose accounts are charged have diminished mental capacity or struggle with the English language. The Article proposes a uniform law to prohibit preacquired account marketing.

Keywords: preacquired account marketing, post-transaction, upsell, Vertrue, Affinion, webloyalty, provell

JEL Classification: D18