'Mystery Charges' Company Affinion Revamps Enrollment Procedure

credit cards

Faced with congressional criticism for allegedly duping consumers into signing up for paid membership programs, the post-transaction company Affinion has said it will revamp its enrollment procedures.

"After careful consideration of the ever changing nature of the internet, Affinion has decided to cease online datapass marketing for its membership programs," company CEO Nathaniel Lipman said in a recent letter to Sen. Jay Rockefeller (D-W.Va.).

Lipman added that Affinion will require consumers to enter all 16 numbers of their credit or debit cards when signing up for membership programs after making e-commerce purchases. The old "datapass" marketing program gathered credit card information directly from e-commerce sites where consumers had recently made purchases.

Rockefeller, who launched a probe in May of so-called "mystery charges" by Affinion and two similar companies -- Webloyalty and Vertrue -- described Affinion's move as a "positive step," but said that other players need to follow suit. "This investigation is ongoing and will not end until all online shoppers are protected and online datapass marketing has been stopped," he said in a statement.

Webloyalty recently began requiring consumers to re-enter the last four digits of their credit card numbers, but stopped short of requiring them to re-enter all digits. Company spokesperson Beth Kitchener said Webloyalty will consider additional measures. "Webloyalty is committed to making sure our offers are clear, unambiguous and consumer friendly," she said in a statement. "We support efforts to enhance practices within our industry and will seriously evaluate this action, together with our e-retailing partners."

A recent report by the Senate Committee on Commerce, Science and Transportation found that Web companies have taken in more than $1.4 billion in the last 10 years by collecting monthly fees from millions of consumers who had unwittingly signed up for services online.

Companies in the post-transaction space target consumers who have just made purchases at sites like Fandango and Shutterfly. Affinion, Webloyalty and Vertrue send pop-up ads to those consumers, offering them discounts. In the past, people who clicked on the pop-ups landed on a site where they could enroll in coupon programs simply by providing their email address and clicking a 'yes' button. The ecommerce sites then shared credit/debit card information with the post-transaction companies, which then began charging consumers monthly fees of between $9 and $12 and sending them coupons and discounts.

Many Web users said that they did not realize the companies were going to charge their credit cards. Some consumers also filed a class-action lawsuit against Webloyalty, which was settled in August for $10 million.

In recent months, several e-commerce companies have stopped working with post-transaction companies. 1-800-Flowers and Priceline recently discontinued their program with Affinion, while VistaPrint canceled its program with Vertrue.

In addition, Orbitz now requires people to enter the 3-digit security code on their credit cards when they sign up for a membership after making a purchase on the site.

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