Senate Investigates E-Commerce Subscription Programs

The Senate Commerce Committee is probing whether some online marketing companies trick people into paying for subscriptions to discount clubs.

 

The investigation, spearheaded by committee chair John Rockefeller (D-W.Va.), is currently focused on Webloyalty and Vertrue. Those companies, and others in the "post-transaction space," target consumers who have just made purchases at sites like Orbitz and Fandango.

The companies send pop-up ads to those consumers, offering them discounts. People who click through land on a site where they can enroll in coupon programs by providing their email address and clicking a "yes" button. Once they do so, the e-commerce sites share credit/debit card information with Webloyalty and Vertue, which then begin charging consumers monthly fees of between $9 and $12 and sending them coupons and discounts.

The enrollment page includes information saying that customers' credit cards will be charged, but people allege they don't see that information in advance.

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"Thousands of consumers have complained that they did not intend to authorize Webloyalty to make regular charges to their credit or debit cards," Rockefeller said in a letter to Webloyalty CEO Richard Fernandes. The senator sent a similar letter to Vertrue.

Rockefeller asked both companies to provide a host of information, including a comprehensive list of online business partners, the number of customers who have signed up and the number who have canceled their membership.

Beth Kitchener, vice president for corporate communications at Webloyalty, says the company has more than three million members. "Our services are valuable," she says, adding that people who shop online for travel can get substantial price breaks by enrolling.

This isn't the first time that online discount companies have come under fire. As far back as 2006, Webloyalty and some of its partners were hit with a class-action lawsuit. U.S. District Court Judge Joseph L. Tauro in Boston is considering whether to approve a potential $10 million settlement in that case.

Orbitz

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