Buy.com, Orbitz linked to controversial marketers

WebLoyalty ad (top half) presented to Buy.com customers during the transaction process. (Call-outs by WebLoyalty)

(Credit: WebLoyalty)

Update: 11:20 a.m. Friday, July 24, 2009: To include comments from Orbitz.

Thousands of Web shoppers have complained that "mystery charges" are showing up on their credit card statements and have accused those who operate so-called Web loyalty programs of duping them into signing up.

As a result, the U.S. Senate Commerce Committee is investigating Vertrue, WebLoyalty, and Affinion--companies who make "cash-back" and coupon offers to consumers and charge those who enroll in their loyalty programs.

"We reserve the right to use or disclose your personally identifiable information for business reasons in whatever manner desired."

--Buy.com's privacy agreement

If you think that anyone who unwittingly signs up to one of these programs must be an e-commerce rookie and that it couldn't happen to someone as savvy as you, take care that your overconfidence doesn't cost you. Josh Lowensohn, a 26-year-old CNET reporter and longtime Web shopper, this week found that a credit card he rarely uses was billed $12 in each of the past eight months by WebLoyalty.

Last November, after almost completing a purchase at Buy.com, Lowensohn was presented with an advertisement that asked him for his e-mail address. (See top half of ad above and bottom half at the end of this story.) He couldn't quickly find a way to get past the page and said he remembers thinking he would type in one of his rarely used e-mail addresses just so he could complete his transaction. Lowensohn was confident he couldn't lose anything because the advertiser didn't have his credit card information.

But WebLoyalty didn't need Lowensohn to charge his credit card. WebLoyalty CEO Rick Fernandes said Buy.com--for a fee--enabled his company to charge Lowensohn.

Web loyalty to whom?
A 10-minute Google search turns up thousands of stories similar to Lowensohn's.

Apparently, many consumers are unaware that for years now, e-tailers such as Buy.com, Orbitz, Fandango, and hundreds of others have given Web loyalty programs, also known as post-transaction marketers, access to their customers' credit cards. Some online shoppers don't realize that when they enter their e-mail addresses into these ads, they are opting into the programs and authorizing the charges.

The retailers maintain they've done nothing wrong and say it's all disclosed in their terms of service agreements. But to those who say they were duped into joining these programs, their Web store has violated a trust.

"We have a longstanding relationship with WebLoyalty because we think they provide value to our customers."

-- Jeff Wisot, Buy.com exec

Representatives from Buy.com, Orbtiz and Fandango say they are doing their customers a favor.

"Consumers find this of value otherwise we wouldn't have it on the site," said Brian Hoyt, an Orbitz spokesman. "We're not in the business of misleading consumers."

Hoyt said that in the past month Orbitz received maybe 30 complaints about WebLoyalty and the percentage of complaints is less than one percent. Buy.com also said the number of complaints is small.

"We have a longstanding relationship with WebLoyalty because we think they provide value to our customers," said Jeff Wisot, vice president of marketing at Buy.com. "They are a company that has millions of customers who are happy with them and they provide valuable discounts and other services to their customers."

What he didn't say is that WebLoyalty pays Buy.com and other retailers for the right to market to their customers. Adam Sarner, a marketing analyst for research firm Gartner, said he is skeptical that these kinds of relationships between marketers and retailers are good for consumers.

"If you demonstrate value and a benefit for both sides," Sarner said, "customers shouldn't be complaining about being tricked into accepting your offer. Obviously, companies that bury terms in fine print or get (credit card information from someone other than the customer) already know consumers don't want their products."

Complaints, lawsuits, investigations
A spokeswoman for the U.S. Senate Commerce Committee told CNET on Wednesday that what started as a preliminary inquiry into WebLoyalty, Vertrue, and Affinion is now a "full-blown" investigation. She said: "It's becoming clearer and clearer that consumers can be at risk for these mystery charges when they shop online."

Fernandes and a spokesman for Vertrue say their practices are legal and even surpass the law's expectations. "There has never been a determination anywhere that (Vertrue's) marketing has failed to comply with the law," said George Thomas, a company spokesman. "I think after a full and fair review by the committee it will find...the practices employed by the company are specifically permitted by (Federal Trade Commission) rules."

Be that as it may, any retailer that knows how to do a Google search could have a tough time explaining to customers why it chose to associate with firms dogged by so much controversy.

"Companies that bury terms in fine print or get (credit card information from someone other than the customer) already know consumers don't want their products."

--Adam Sarner, Gartner analyst

Class action lawsuits have been filed against both Vertrue and WebLoyalty. In Vertrue's case, a complaint filed last year in Massachusetts alleges "consumers almost never legitimately join any of Vertrue (or its brand) Adaptive Marketing's various membership programs." In 2006, a complaint was filed that accused WebLoyalty of perpetrating a "coupon click-fraud scheme" that involved the "deceptive sale" of discount products and the "unauthorized transfer of private credit and debit card information." Fandango was also named in the suit.

That case was settled out of court for an undisclosed amount and some people who claim they were misled by WebLoyalty may be entitled to some money, according to a Web site that appears to be created to handle claims.

In February, about a half dozen British retailers, including HMV, the country's biggest chain, either "severed or suspended ties" with WebLoyalty, after receiving "a wave of complaints," according to a report in The Independent, a British publication.

Back here in the States, the Better Business Bureau has received thousands of complaints about WebLoyalty and Vertrue. WebLoyalty has a "C+" rating from the bureau and Vertrue has an "F."

WebLoyalty and Vertrue assert the complaints come from a tiny fraction of their overall customers.

Happy customers
In Lowensohn's case, he was presented with a coupon worth $10 off his next purchase. Fernandes said Lowensohn was informed three times on the page that he would be billed after 30 days and was shown a graphic that underscored the terms. Following that, Lowensohn was sent a dozen e-mails that notified him he would be getting billed.

This is how Lowensohn saw it: the page with the offer appeared during the buying process when all he wanted to do was to confirm his transaction, he said. The page was stuffed with fine print and it wasn't apparent to him how to move past the page without keying in his e-mail address.

As for the e-mails WebLoyalty sent him, Lowensohn, like millions of other Internet users, tries to avoid spam by providing advertisers with an e-mail address he rarely uses or checks. He never saw WebLoyalty's e-mails. He also never knew that Buy.com had cut a deal to turn over his credit card information to marketers.

"In the terms and conditions," wrote Buy.com's Wisot, "it's very clear that (customer) credit card information is going to be transferred over to WebLoyalty."

A check of Buy.com's terms of use and privacy policies didn't turn up WebLoyalty by name. But there is this: "Except as limited below, we reserve the right to use or disclose your personally identifiable information for business reasons in whatever manner desired."

That appears to leave Buy.com plenty of room to do as it pleases with customers' personal information.

In the end, WebLoyalty says it gives unhappy customers their money back when they ask. The company has agreed to refund most of Lowensohn's $96. Before he gets it all he must submit an affidavit and the company must OK it after a review. Fernandes said his company's refund policy is "easy."

It's safe to say that many people don't check their statements carefully. What happens to people who go for years without catching charges? They would presumably be paying the balance on their credit card charges as well as interest.

Sarner, from Gartner, said that even if the Web loyalty programs affect only a small percentage of an online store's customers, it's bad for consumers as well as the retailer:

"What good is it going to do for your brand if these people hate you."

Bottom half of WebLoyalty ad presented to Buy.com customers during the transaction process. (Call-outs by WebLoyalty)

(Credit: WebLoyalty)

[smith_jr]

I have purchased many items from buy.com in the past and have not had any problems with this--so far. But I regard this practice as disgusting, and if I ever see such a charge on any of my cards, they will lose a customer for good. This whole thing reminds me of the "freecredit dot com" junk which isn't free at all. Scammers abound!

[Lerianis3]

It's not only disgusting, in most states it is illegal to charge someone for something that they do not ACTIVELY plug their credit card information into themselves. These companies need to be shut down and the hammer brought down on the websites that allow these things.

[inachu1]

Disgusting practices.

[sharmajunior]

Pose a 100 Trillion dollar lawsuit against these companies and get the MoFo's out of business.

[bjglav492]

years ago I used to use Buy.com often, but I have found them to be increasingly suspect. Charging abnormally high shipping rates for items that show up later than expected. Coming back months after a purchase and saying you were not charged enough and they are going to charge you for the difference now. I don't do business with them anymore and this only reinforces that.

[Lerianis3]

Coming back months after a purchase and telling you that you were not charged enough? Hell no, that is illegal and if it really did happen and you documented it..... contact your local attorney general's office, if not the state office.

[gerrrg]

I came across that just this week when I was purchasing an item from Buy.com.

I too, had nearly clicked all the way through, but stopped short when the warming bells were going off in my head as I realized that it was taking me way too long to figure out WHO was behind the promo, and they were asking me for information that I would have already been provided in my Buy.com account.

In my mind the practice is a sly tactic aimed specifically for subterfuge, and quite frankly, was Buy.com willing to stand behind any problems encountered with these other companies? Not likely, right?

[hooligan317]

Why did you have to click nearly all the way through?? The first click says what you are about to do. This seems like a pretty simple yes or no page, what is so confusing here?

Enter your email address and click YES below to sign up for Shopper Discounts & Rewards
By entering my email address as my electronic signature and clicking YES, I have read and agree to the Offer and Billing Details and authorize Buy.com to securely transfer my name, address and credit or debit card information to Shopper Discounts & Rewards for billing.

[omnichad]

Wow....hey hooligan317. Do you work for WebLoyalty? Or which one? I see your account was created today just to say this.

[appleannie2324]

I agree with hooligan317. Just don't put your info in and click yes if you don't want it. Simple.

[LDMartin1959]

"We reserve the right to use or disclose your personally identifiable information for business reasons in whatever manner desired." is not even close to the same thing "We are going to give your credit card information to someone else so they can charge you a fee for no apparant reason." I doubt the phrase "Personally identifiable information" would stand up in court as an acceptable term for "credit card information" and I doubt the phrase "for business reasons in whatever manner desired" would stand up in court as an acceptable term for "initiate additional charges to your credit card." In fact, is the whole concept of using personal informat "for business reasons in whatever manner desired" even legal?

[appleannie2324]

They don't give away Credit Card numbers randomly. People need to fill out the form and click "yes, I agree". Look at the above graphic. It says it 5 times.

[ddesy]

Even if these "Web loyalty programs" comply with the letter of the law, they have to know that they are doing something that many people would find unacceptable.

George Thomas of Vertrue said:

"I think after a full and fair review by the committee it will find...the practices employed by the company are specifically permitted by (Federal Trade Commission) rules."

Doesn't that say it all? The way it is worded suggests that they are trying to work through what holes they can find in the laws to dupe people out of money.

[Lerianis3]

Yep, that is exactly what they are doing: working through holes in laws in order to stay in business, and those 'holes' need to be closed, WITHOUT opening other holes.

[omnichad]

They should be thanked for explaining the next step. We need new rules.

[LDMartin1959]

There is a theme here: Victims complain that they can not make a legitimate purchase without inputing information into the page "agreeing" to "participate" in these programs. At no time to the representatives of these e-tailers say that there is any way to get past these pages without inputing the information (if they had such a way, they'd be pointing to it and saying, "See, they had a way out and didn't use it."). If you have to agree to purchases of items you don't want in order to purchase items you do want, then I personally consider the e-tailer requiring such "participations" guilty of fraud.

[Sweatman15k]

The best way to handle this going forward is to stop using these online companies. There are plenty of other companies that don't do this.

I stopped using Fandango and Buy.com due to the fact that when I was buying somehting, I got the confusing, sign-up now and receive $$ of your next purchase, crap.

Buying something online should be as easy as: Step1 - View shopping cart, Step 2 - Check out (payment method), and Step 3 - Confirm purchase.

[fdunn3]

I avoid Buy.com like the plague but to find out even more e-tailers are involved is simply disgusting and all the resources of the federal government should go into first obtaining refunds for the customers and second punitive damages should be imposed on both the companies for this scams.

BOYCOTT ALL E-TAILERS that don't have a simple check out without have to go through this scam.

I can only hope that the federal government pushes these companies to the brink of bankruptcy.

One more thing Someone like the New York Times should do their own investigation and list all E-tailers that participate in these practices.

FD, San Antonio

[MadLyb]

i use Buy.com on a regular basis and this is an annoyance, but it is not required and there are links away from the junk.

With that said, I consider this to be phishing, legal, but still phishing. eTailers should be called out for still supporting these companies.

[Ronlap]

Um, while this is a disgusting practice, anyone who doesn't validate *every* charge on their credit card is either buying too much crap or has too many cards.

[Dalkorian]

The part that jumped out at me is the fact that Josh has been billed like this for the last 8 *MONTHS* and just now noticed it. Who's receiving his credit card bills then? Don't people review their bills to ensure they're accurate? I mean forget about theft (ID or otherwise), what about simple human errors? I don't think I've ever once found a surprise in a CC bill, but I still look each and every one over before doing anything with it. It doesn't take that long (seconds) and it reassures you the bill is accurate.

And let's face the truth here - though I agree this is sleazy as all get out and refuse to do business with these companies that do this to their customers (hello buy.com, orbitz - FAIL!), it's pretty easy to find the dimmer "no, I don't want your additional garbage" button under the bright "please rape me" button. You need to open your eyes and look for it, but it's right where you'd expect it to be. This doesn't take rocket science, just a little consciousness.

I'm guessing Josh hasn't been awake lately. Maybe this woke him up.

I've used fandango and buy.com many times and haven't run into these problems yet. However, both sites just lost a customer.

[Nancy_Nally]

ProFlowers.com does this too. We just discovered that we've been being charged $14.95/month for awhile on one of our credit cards from it. The credit card company says they can't help us because the companies involved did an excellent job of hiding authorization in the fine print of the ProFlowers web site and check out process. The marketing company promised to get back to us about possibly refunding some of the money but (surprise, surprise) we never heard from them.

BooksAMillion ran a similar slimey campaign last holiday season on its club members. They were told that they were getting 4 free short-term magazine subscriptions as a thank you from the company. Of course, you assume they are trying to hook you and then the magazine will offer to subscribe you. No, actually, the fine print on the receipt that they asked you to sign said that they would charge the credit card you were paying with at the register for all 4 subscriptions (back to the first issue you received) if you didn't cancel them by a certain date. Except nowhere was it mentioned about that in the sales pitch I received. I wasn't told I was signing to authorize a charge. Fortunately I read the receipt before I signed it and caught it, but I was told that even though I hadn't actually signed, the subscriptions had already been ordered because they had been entered in the register and I would have to call and cancel them myself from home - that there was no way for the store to cancel from the register. It took me multiple phone calls to get the cancellations done - the magazines kept coming anyway.

[fdunn3]

That is when you cancel your CC and have another issued. Then when the scamers go to bill against it they do not receive an Authorization.

[JohnQueuePublic]

If you take a look at the screenshot provided, you'll notice that part of the gimmick these marketers use is to crowd the purchase confirmation page with all of the fine print. They do this knowing that the customer is simply looking to quickly finish up and go on to do whatever else they want to do. They know the customer doesn't read that stuff. Another tactic you'll see they use is to make the "no thank you" hard to find/see knowing that the human eye looks for the brightest button on the page for confirmation. You'll notice they make the sign-up option the prominent choice on the page.

In addition to these sleazy marketing tactics, I try not to do business with websites like Amazon.com and Buy.com that cram their pages full of third party pay per click advertising. It is so tacky and nothing more than corporate greed.

[shootfirst]

Yep no respectful business will put in hidden terms, or make it so that you can join something unwittingly with their blessing. Retailers should get this into their heads and soon that we are given the choice to choose what we buy and when they try to force our hand in anyway that is just going to **** us off. I check my statements regularly and I was once billed for a service because I did not terminate my account with a company one time before the trial period was over. I wasn't even notified even though they had my billing address, my phone number and my email address. I told them it was unacceptable and told the employee on the other end not to pleasantly to put their supervisor on the phone and I went off on them until they refunded my money and I told them that anymore billing would not be a good idea as I would pay them a visit in person. These companies use the web as a way of distancing themselves from their customers so they can pull crap and really it is not necessary, if your products and service are good customers will come back and spread the word. Also most ecommerce sites have a paypal option, which can't be billed unless you specify it is okay for the billing web loyalty companies cannot get payment as you have to confirm it on paypal before the charge goes through which is how I pay for basically everything on the web now. Companies that don't offer paypal are suspect in my opinion as it is a very easy module to load in almost all shopping cart programs and a great way for customers to pay.

[d.gallea]

The solution to all this is simple: Require an opt-in reply/click-through from an email sent to the address entered on the website. The email could reiterate all the terms, and would be much more likely read and understood by the purchaser since it is no longer seen as part of a purchase. Upon opting in, the purchaser would get the page with the $10-off coupon (or in another email).

[Dalkorian]

I have an even easier solution - buyer beware. Doesn't that ring any bells with anyone anymore?? If you're confronted with a confusing mess like the above, take a deep breath. Look at it. Yes, the bright shiny button is enticing, but you know you don't want to do that (why enter an email address again? Oh yeah, because it's some 3rd party tack-on and they want your approval for something). Look again, right below that bright shiny button is the dark, dimmed out looking "no thanks, I don't want to get raped today" button.

OK, so you had a few beers/glasses of wine/bong hits/whatever before making this purchase and you just did the wrong thing. Fine, everyone makes mistakes. When you find the first billing on your credit card statement, you look into what happened and make it right (cancel it). Then you stop doing business with the company that duped you to begin with, buy.com in this case.

Or you could wait for 8 months and cry like an infant that you were duped. Of course you were duped, you're an idiot. Did you deserve it? No. Do I pity you? No.

[Kasiola2003]

I have used Buy.com A LOT, I've never had a problem with them, the stuff I get normally has no or little shipping fees. I think this practice is disgusting as others have mentioned. It's like telling a friend something that should be kept confidential and finding out they told, it makes you feel violated. Buy.com should be ashamed of themselves. I'm not sure I want to continue doing business with them. I agree with the previous poster that an opt in click thu email could work.

[Kasiola2003]

I have used Buy.com A LOT, I've never had a problem with them, the stuff I get normally has no or little shipping fees. I think this practice is disgusting as others have mentioned. It's like telling a friend something that should be kept confidential and finding out they told, it makes you feel violated. Buy.com should be ashamed of themselves. I'm not sure I want to continue doing business with them. I agree with the previous poster that an opt in click thu email could work.

[daherrhoyman]

Yep, happened to me on ProFlowers. Took me months to notice, being busy with moving to a new home. I called the 8xx number on my credit card statement and within a couple of voice mail menus there was a way to get out of this program. They know it's not good since I didn't even have to talk to a human to get out.

PS, i've been developing for the web since '93 and am about as savvy as they come. if it caught me, it's definitely designed to be under the radar. time for new legislation or regulation to make this illegal.

[Neotrope]

Here's the simple fact of buying online - READ THE PRIVACY POLICY FIRST. If in the terms they state they will sell, share, give away your personal data without your consent - don't buy from them. Avoid ANY site which takes ANY personal info (name and email are considered personal data, not just your CC info) and does not present a FULL privacy policy (a simple statement "we won't share your info" doesn't meet Calif. law for a prominent privacy statement, or COPPA federal law). I've already decided never to buy from buy.com ever again, based on their privacy statement. It's not worth saving $10 on an LED toy, or $50 on a notebook refurb (available many other sources online), to know my info is going to be shared with spammers, and other companies who I haven't opted in to get advertising from.

[sandonet]

This is excellent advice. I used to cover e-commerce back in the dot com boom and everybody's privacy policy was the roughly the same: "We will never share your personal information with third parties." That appears to have changed.

[gggg sssss]

Hereis teh simple fact about buying on line: dont do it.except maybe Sear. The rest are scum