Congress Limits Online Data Pass Marketing

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A new law banning data pass marketing cleared the House on Wednesday. The measure, passed by the Senate last week, now moves to President Obama for signature.

The "Restore Online Shoppers' Confidence Act," spearheaded by Sen. Jay Rockefeller (D-W.Va.), aims to stop Web companies from tricking consumers into registering for paid subscriptions.

The bill imposes new restrictions on post-transaction marketers, which offer Web users the chance to enroll in subscription services like memberships to discount clubs immediately after they make a purchase at an e-commerce site.

Among other new curbs, post-transaction companies can no longer charge consumers' credit cards unless the consumers re-enter their entire card numbers as well as their names and addresses. The bill also prohibits online retailers from disclosing consumers' credit card information to post-transaction companies.

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Violations are considered unfair and deceptive practices, subject to sanction by the Federal Trade Commission and state attorneys general.

The measure marks the culmination of an 18-month investigation by Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va) into data pass marketing -- or the forwarding of consumers' credit card numbers to post-transaction companies.

Such companies target consumers immediately after they have made purchases on online retail sites like Fandango by sending pop-up ads that offer 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 financial information with the post-transaction companies, which would charge consumers monthly fees ranging up to $20. Many Web users said they did not realize the companies were going to charge their credit cards.

A recent report issued found that Web companies garnered more than $1.4 billion in the last decade through post-transaction programs.

Since Rockefeller launched the probe, the three major post-transaction players -- Webloyalty, Affinion and Vertrue -- revised their practices to require consumers to re-enter all 16 digits of their credit cards in order to enroll in discount clubs after making purchases. Visa also recently said it will require consumers to re-enter their credit card numbers online before processing payments.

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