Senators Bash Online Marketing Tactics
Senate Commerce Chairman John D. (Jay) Rockefeller, D-W.V., said Tuesday that he may pursue legislation to crack down on some controversial online marketing tactics that result in consumers paying for products and services they did not realize they signed up for or used. During a hearing on these aggressive online marketing methods, Rockefeller detailed the results of a committee investigation into the marketing tactics of three firms: Affinion, Vertrue and Webloyalty. "Tricking consumers into buying goods and services they do not want ... It's not ethical. It's not right and it's not the way business should be done," Rockefeller said.
The problematic transactions, detailed in a committee report, take place when a consumer is ready to finish buying a good or service online from a trusted retailer. Consumers are asked if they want a discount or reward and if they agree, they are often automatically signed up for the services offered by the three firms and charged a monthly fee. "For a few extra bucks in profits, these merchants pass their customers' personal billing information on to mysterious companies," Rockefeller said. Among the online retailers that have partnered with Affinion, Vertrue and Webloyalty or others include major companies such as US Airways, Continental airlines, Pizza Hut and Travelocity. The marketing firms and their online retail partners have made more than $1.4 billion from these tactics and have charged more than 30 million Americans, he added.
Ray France of Florida, a military veteran who served in Iraq and Afghanistan, was one of two consumers who testified at the hearing. He said he was unaware he had signed up for one of the services until he got a call saying his bank account was overdrawn. France was told one of these marketing firms had been withdrawing a monthly fee for a service he did not know he had signed up for when he used the Internet search services of a firm called Intelius.
Other senators at the hearing agreed with Rockefeller that legislation may be needed to address the problem. University of Minnesota Law School professor Prentiss Cox said there is an easy legislative fix: "Shut down the selling of access to consumers accounts" to other firms. As a result of the panel's probe, Affinion and Webloyalty have announced changes to their marketing practices.
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