Nov

18

Feds: Top e-tailers profit from billion-dollar Web scam

[From CNET News]

by Greg Sandoval

Words like “scam,” “fraud,” and “arrest” filled the air during a Senate hearing on Tuesday that focused on the controversial marketing companies that allegedly dupe consumers into paying monthly fees to join online loyalty programs.

53404B5B-BDCD-4B3B-9B87-5089FA035A7E.jpgRay France, a U.S. Army veteran, testifies at a Senate hearing about how consumers are duped into paying monthly fees to join online loyalty programs.
(Credit: U.S. Senate Commerce committee)

Vertrue, Webloyalty, and Affinion generated more than $1.4 billion by “misleading” Web shoppers, said members of the U.S. Senate Committee on Commerce, Science and Transportation, which called the hearing. Lawmakers saved their harshest rebuke for Web retailers that accepted big money–a combined sum of $792 million–to share their customers’ credit-card information with the marketers.

Senate investigators launched their six-month inquiry by examining complaints from people who discovered mysterious charges on their credit card bill. For years, Web shoppers have complained that they were signed up to some Web loyalty program without their knowledge and were charged fees until they discovered the problem and complained. Some paid fees for years.

The government says the investigation shows that Webloyalty, Affinion, and Vertrue “trick” consumers into entering their e-mail address just before they complete purchases at sites such as Orbitz, Priceline.com, Buy.com, 1-800 Flowers, Continental Airlines, Fandango, and Classmates.com. A Web ad, which many consumers say appears to be from the retailer, offers them cash back or coupon if they key in their e-mail address.

Many of those who complained say they don’t fear the ad because they aren’t being asked to turn over credit-card information, according to the Senate report. But buried in the ad’s fine print is notification that by entering their e-mail address, the shopper is agreeing to join a loyalty program and allowing the store to authorize marketers to charge their card each month, between $9 and $12.

Continue reading Feds: Top e-tailers profit from billion-dollar Web scam at CNET News

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