WASHINGTON—John D. (Jay) Rockefeller IV, chairman of the U.S. Senate Committee on Commerce, Science and Transportation, announced Tuesday the release of a new investigative report titled “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers.”
The report's release coincided with a hearing before the Oversight & Investigations Committee.
“After six months, this committee has found that the companies we are investigating have figured out very clever ways to manipulate consumers’ buying habits so they can make a quick buck," Rockefeller said in a prepared statement. "American consumers have been complaining for years about these misleading practices and asking for answers—and rightly so. Millions of Americans are getting hit with these mystery charges every month. We have to do all we can to protect the hardworking families relying on us to look out for their wallets and well-being.”
According to TechCrunch, “Hundreds of well known ecommerce companies add post-transaction marketing offers to consumers immediately after something is purchased on the site. Consumers are usually offered cash back if they just hit a confirmation button. But when they do, their credit card information is automatically passed through to a marketing company that signs them up for a credit card subscription to a package of useless services. The ‘rebate’ is rarely paid.”
A commenter on WebLoyalty.com explained in more detail the intricacies of the scams.
“Here’s how it works,” wrote the commenter. “Shopping cart providers (like VirtualCart) have an agreement with this company (Webloyalty, aka WLI Reservations Rewards) whereby when a customer gets to the confirmation page of a transaction in a store that uses a VirtualCart shopping cart, they see a little box saying: ‘Your purchase is complete. Click here to claim your $10 Cash Back Reward on your next purchase!’
“It looks, for all intents and purposes, as though it’s part of the store that you’re on but underneath the 'Continue' button that you can click, in small print, it says ‘By clicking above, you can claim your reward from the reward provider, Reservation Rewards.’ It basically banks on the assumption that customers trust the site they’re on, THINK they’re getting $10 back from that store, and so they click on it. Once you click on it, it pulls your credit card information from the site you just used, and signs you up for this ‘Rewards’ program.”
Findings of the report include:
* Three Internet companies—Affinion, Vertrue and Webloyalty—exploit consumers’ expectations about online shopping to trick them into joining their membership clubs.
* Consumers often do not know these companies have their credit card numbers until they start seeing charges on their bank statements.
* Affinion, Vertrue and Webloyalty and their e-commerce partners have earned more than $1.4 billion in revenue with their misleading tactics.
* There have been more than 30 million consumer enrollments in these clubs and several million people are unknowingly enrolled in these clubs at any one time.
* More than 450 e-commerce websites and retailers have partnered with Affinion, Vertrue and Webloyalty to employ aggressive sales tactics against their online customers, splitting the revenue about 50-50.
* Eighty-eight companies have made more than $1 million by partnering with Affinion, Vertrue and Webloyalty, including Classmates.com, which made more than $70 million.
* Almost no one receives the “cash back award” that Affinion, Vertrue and Webloyalty offer to online consumers at the time of enrollment.