With Cyber Monday, the unofficial start of the Internet holiday shopping season nearing, a Senate committee Tuesday condemned three online companies, saying they are tricking consumers into signing up for subscription services they don't want.
Internet companies Affinion, Vertrue and Webloyalty are using aggressive sales tactics to scam millions of customers, the Senate Commerce Committee said.
According to a committee report, the three companies enter into agreements with other more familiar Internet shopping sites that sell movie tickets, flowers and other items.
Just before a customer completes the sales confirmation process the customer gets an offer that often promises $10 cash back or other rewards, and appears to be connected to the shopper's original transaction.
When the shopper clicks "continue," or "yes," the shopper — often without knowing — enters into a new financial contract with a membership club operated by Affinion, Vertrue or Webloyalty, the report said. The shopper's credit card information is sent to the membership club company, which charges monthly fees, by the shopping site the shopper originally visited.
Legal, but not right, senator says
"Beware if you're a consumer," said the committee's chairman, Sen. Jay Rockefeller, D-W.Va. "I worry about this because the holiday shopping season is just beginning." He added that while the companies insist they are not breaking any laws, "just because what you say you do is legal doesn't make it right."
While the day after Thanksgiving is known as Black Friday, historically the point when retailers start to turn a profit, the following Monday has become known as Cyber Monday because it's the day when many shoppers begin trolling the Internet for bargains from computers at work or home.
The three Internet companies said in statements that they have put additional safeguards into effect, including clearer disclosure statements and new requirements that customers must enter the last four digits of their credit card number to formalize the subscription purchase.
"We only want members in our programs who want to be members so they can take advantage of the opportunity to save hundreds of dollars a year, and even a few complaints is too many," Webloyalty said in an e-mail statement.
Consumers, however, had their own stories to tell.
Linda Lindquist of Sussex, Wis., told the committee that she went online to buy movie tickets and clicked on a coupon that said "Get $10 off your next purchase." She said she thought it was a legitimate offer from the movietickets.com Web site she had just bought the movie passes from.
A few months later, she said, she realized she had been billed more than $300 for "Reservation Rewards" and "Shoppers Discounts" — two subscription services she didn't knowingly sign up for. She complained, and was later told by movietickets.com that she would get a full refund.
"I am a college-educated person who is online every day," she told the committee. "I have seen many scams and offers on the Internet and have only been lured in by one, this one, due to the fact that the scam was associated with a reputable Web site and required just one click."
The committee began its investigation in May into the use of aggressive sales tactics on the Internet, and in its report said more than 450 e-commerce companies have partnered with the three firms in the past 10 years.