The U.S. Senate Committee on Commerce, Science and Transportation launched an investigation into the marketing practices of WebLoyalty Inc. and Vertrue Inc. last month after noting thousands of complaints from online consumers, the committee says. Consumers have complained that they were unaware when responding to cash-back offers that they were signing up for an ongoing service that automatically charged a monthly fee ranging from $9 to $12 to their credit cards, the committee says.
“Thousands of American consumers have been complaining about these deceptive practices and asking for answers—and rightly so,” says committee chairman Sen. Jay Rockefeller (D-WV).
The investigation is focusing on the post-transaction membership programs offered by WebLoyalty and Vertrue. Although the committee refers to “a group of marketing companies” as the source of complaints, it only lists WebLoyalty and Vertrue as having been contacted by the committee.
Under a typical program, a consumer who completes an online purchase transaction on an e-commerce site such as ticket retailer Fandango.com or travel services site Orbitz.com will see a pop-up window offering to refund part of the purchase amount if she agrees to provide an e-mail address and sign up for a membership program that offers discounts at multiple e-commerce sites.
When they click to accept the offer, many consumers don’t realize that the action automatically forwards their credit card account number to the membership program provider to pay for ongoing monthly charges, which continue until a consumer requests a cancellation, the committee says.
In four-page letters to the chief executives of WebLoyalty and Vertrue, Rockefeller has requested a long list of details related to the two companies’ online membership programs, including the number of participating e-commerce sites, the amount of revenue raised through relationships with e-commerce sites, the number of consumers who have signed up for the membership programs and the number of consumers who have canceled their memberships.
A spokeswoman for Norwalk, CT-based WebLoyalty says the company is cooperating fully with the committee’s request for information. She adds that WebLoyalty is careful to place the terms of its programs where consumers can easily view them before signing up.
A spokesman for Vertrue, which is also based in Norwalk, says Vertrue is also cooperating with the committee’s requests. Vertrue says it provides clear disclosure of its terms in the proximity of where consumers sign up online for its programs, and follows up with e-mail messages that also explain the terms, he adds.
“The percentage of complaints from consumers is a tiny fraction of the number of consumers enrolled in our services,” he says. “After a full and fair review by the committee, we feel they will agree we provide full and fair disclosure that exceeds all applicable law.”
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