Wednesday, Nov. 18
Posted 2 p.m. EST
Sen. Jay Rockefeller, D-W.Va., held hearings yesterday about three direct marketing companies -- Affinion, Vertrue and Webloyalty -- that he says trick consumers into joining membership programs when they are making online purchases from "reputable" retailers. But the retailers also pay these marketing companies a "bounty" for each consumer that signs up -- most unwittingly. Here's how the programs work, according to the report from Sen. Rockefeller's staff:
The sales tactics used by these three companies exploit consumers' expectations about the online "checkout" process.
With the cooperation of their online "partners," the three companies insert their sales offers into the "post-transaction" phase of an online purchase, after consumers have made a purchase but before they have completed the sale confirmation process. These offers generally promise cash back rewards and appear to be related to the transaction the consumer is in the process of completing. Misleading "Yes" and "Continue" buttons cause consumers to reasonably think they are completing the original transaction, rather than entering into a new, ongoing financial relationship with a membership club operated by Affinion, Vertrue, or Webloyalty.
Even more misleading and confusing is the "data pass" process Affinion, Vertrue, Webloyalty, and their partners use to automatically transfer consumers' credit or debit card information from the familiar web seller to the third-party membership club. Passing consumers' billing information directly to Affinion, Vertrue, or Webloyalty, without requiring consumers to re-enter it, deprives consumers of notice that they are entering a new, ongoing financial relationship with an unfamiliar company. After a 30-day "free trial" period, Affinion, Vertrue, or Webloyalty begin charging the consumer a monthly fee of $10 to $20 until the consumer cancels the membership.
The Senate Commerce Committee opened the investigation due to complaints from "thousands of online consumers."
And the retailers that have paid include many Web sites that you probably have used. Here's the complete list from the Commerce Committee's report:
E-commerce partner income
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