The U.S. Senate Committee on Commerce, Science and Transportation today is looking into deceptive “loyalty” discount programs – those that offer discounts and coupons to customers for a monthly fee. Marketing companies Webloyalty, Affinion and Vertrue and the retailers Continental Airlines, FTD and Classmates.com that let them charge customers’ credit cards, are in for a closer look.
The Committee is investigating reports that the marketing companies’ charges are showing up on credit card accounts of people who never ordered the service. Shoppers commonly encounter the marketing companies’ pitch in pop-up-windows when they make online purchases. The ads only ask for e-mail addresses, hiding the details of the monthly charges in small print. The retailers then supply the marketing companies with credit card information.
The committee has been investigating the businesses for six months. Recently Webloyalty and Affinion said they would change their advertising to require customers to submit the last four digits of their credit cards to confirm that they want to become members.
Also expected in the hearing today are the results of a study the committee has completed which includes how much money the retail partners are paid by the marketing companies.
These “enrollment” schemes can be really tricky. I inadvertently got roped into two of these things in the last three years. I like to think of myself as being pretty savvy after researching and writing about malware and the Internet underground for 15 years, but they got me. Yep, twice: once on a software company web site and another with a travel and reservation site. They’re good.
CNET story here.