Senate Expands Probe Of Discount Club Practices

As part of its investigation into whether consumers are being duped into enrolling in online discount clubs, the Senate Commerce Committee has requested information from 16 large marketers including Fandango, Orbitz and Shutterfly.

Sen. Jay Rockefeller (D-W.Va.), who is leading the committee's investigation, alleged in letters to the e-commerce companies that consumers "unknowingly and inadvertently become enrolled in membership clubs."

He added that the customers "are then charged on a monthly basis for a service they did not want and are unaware they have."

The other companies receiving letters include 1-800-FLOWERS.com, AirTran Holdings, Classmates.com, Continental Airlines, FTD, Hotwire, Intelius, Movietickets.com, Pizza Hut, Priceline.com, Redcats USA, US Airways, and Vistaprint USA.

The Senate had earlier requested information from three companies in the post-transaction space -- WebLoyalty, Vertrue, and Affinion. These companies typically send pop-up ads to consumers who have just made an e-commerce purchase at sites like Orbitz or Fandango.

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Clicking on the ads, which promise discounts, takes people to a site where they can enroll in coupon programs. Once people enroll, the e-commerce sites share credit/debit card information with the post-transaction companies, which then beWgin charging consumers monthly fees of around $9 to $12 in exchange for sending them coupons and discounts.

The enrollment pages state that members will be billed, but consumers have alleged in complaints to the Better Business Bureau and in lawsuits that they didn't realize their credit cards would be charged.

Rockefeller's letters to the e-commerce companies, sent Friday, ask the companies to state how many customers have signed up for membership programs, whether any of those people have complained and whether the companies believe their customers joined unknowingly.

Travel site Orbitz recently began requiring customers to re-enter their credit cards' security authorization codes in order to enroll in discount programs. Orbitz also offers refunds to people who call after receiving a bill and complain that they didn't realize they would be billed for these membership clubs.

The company said in a statement that it has been "proactively and voluntarily" working with Rockefeller. Orbitz added that it intends "to continue to engage the Senator's office to demonstrate how we have added additional protections for consumers who opt in to these programs."

In August, WebLoyalty settled a class-action lawsuit stemming from similar allegations. The company, which didn't admit wrongdoing, changed its practice to require that consumers re-enter the last four digits of their credit card number as part of the enrollment process.

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