Six ways merchants fill your credit card with unwanted 'gray charges' What do you call surprise charges on your credit card bill that aren't fraudulent but are definitely unexpected and unwanted? Fraud-fighting firm BillGuard.com calls them "gray charges," and it says many consumer bills are laden with hundreds of dollars worth of them annually. BillGuard breaks the gray charges down into six categories - automated payments, "zombie" subscriptions, unwanted auto-renewals, negative option marketing, free-to-paid services and cost creep. The charges might be small -- $12 to $18 generally -- but they add up. One in four BillGuard customers is hit with gray charges, with the average annual cost pegged at $358, the firm says. "This is big business, billions of dollars for these companies," said BillGuard CEO Yaron Samid. I am surprised by the amount of legitimate companies -- well-known companies -- that have repeatedly confused and deceived customers into paying. The gray-charge warning comes at a good time. As the holiday shopping season hits full force, consumers will pull out plastic and click "I agree" to all sorts of fine print and contracts they may not fully understand. BillGuard users sign up with the firm and allow it to scan their bills for suspicious or unwanted charges reported by other users, similar to the way spam filters work. That's how it finds fraud and other questionable charges. While its customer sample is not a scientific, representative sample of the general population, it is a large pool of data worth mining for insights into consumer credit card problems. Unwanted and misunderstood subscriptions account for nearly half of gray charges, the firm found. One example: AOL dial-up subscriptions set up with automatic monthly billing, which repeatedly show up on BillGuard users' bills. Last summer, AOL's earning report revealed that 3 million consumers still pay for its dial up Internet access service. It's unknown how many need it because they can't have or don't want broadband Internet access, but BillGuard said its customers usually turn off AOL after they are informed of the charges. Automated payments are to blame for a host of unwanted charges, Samid said, such as unused health club subscriptions or websites that include unexpected monthly fees in the fine print. "These are charges that, if people were aware of them, would cancel immediately," he said. Merchants use five other techniques to similarly draw money out of consumers" credit or debit cards, BillGuard says: Zombie subscriptions. Consumers cancel a service, but it "comes back to life" against their will, and charges reappear on their cards. Unwanted auto-renewals. Consumers sign up for products and forget to cancel before the date of their automatic annual renewal. After the charge is placed on their credit cards, the merchant claims it's too late to cancel. Negative option marketing. Merchants use various tricks to enroll consumers in purchase agreements unless they actively opt out. In one method, a second unwanted service is lumped in with another legitimate purchase. Free-to-paid services. The word free just doesn't mean what it used to. Many merchants trick consumers into paying for services they think are free, or persuade them to sign up for free trials which automatically become paid services Cost creep. A monthly or quarterly purchase that slowly climbs from $5.99 to $6.99 to $7.99, and so on, under the buyer's radar "These companies are walking in this gray area of ethics," Samid said. Is it up to them to warn people before they are auto-renewed? Maybe, maybe not, but they are taking money from people who are confused. Consumers are responsible for carefully checking their credit card statements and looking for unexpected charges. But research has shown repeatedly that most consumers rarely -- if ever -- perform line-by-line bill audits. BillGuard surveyed its customers and found that only 1 in 10 does so. We have caught merchants taking advantage of this. It's a true science for them," he said. As far as law is concerned and the banks are concerned it's legal. The best way to avoid such unwanted charges is regular, intense scrutiny of every billing statement. But when annual or quarterly auto-renewals occur, it's often too late when charges appear on a credit card bill. Then, consumers should call the merchant and demand a refund, and threaten to contest the charge with the card-issuing bank if the merchant refuses. Because merchants face additional fees when such a "chargeback" occurs, they often relent when knowledgeable consumers make that threat. BillGuard also offers a free "dispute this charge" service at its website. That could be handy as online shopping hits a fever pitch in a week or so. Credit score expert John Ulzheimer, president of consumer education at SmartCredit.com, offers some additional holiday season credit card safety tips: Despite those tempting discount offers, don't open up store retail credit cards while shopping. Doing so can hurt your credit score -- even the mere application can hurt your score - and of course, it'll be tempting to use and abuse in the new year. Even though they look the same, credit cards have stronger consumer protection that debit cards, so pick credit cards when making purchases. Don't be fooled by the "credit or debit" question at checkout lines - a debit card is a debit card, even if you pick "credit" and run the charge as what's really called a "signature debit" vs. a "PIN debit" transaction. Credit cards are still the safer choice when it comes to fraud. And something you might not consider as your rack up what might be the largest credit card bill of the year: Use your highest-limit credit card for all your purchases, rather than spread them around on different cards. Spreading balances around "will lead to score damage," says Ulzheimer. If you've got a card with a $15,000 or higher limit, use that one for everything. That minimizes the "debt to limit" credit score problem." " Follow Bob Sullivan on Facebook. Follow Bob Sullivan on Twitter.