Hidden Subscriptions

Shopping Online: Hidden Subscription Scams

Vertrue, "Shopping Essentials" and others
Click here to claim $15.00 Cash Back on this purchase!'

Have you ever looked at your credit card statement to see a recurring charge that you didn't expect and didn't order? VISA credit card company reports that nearly three in ten Americans have been stung by a subscription trap. A hidden subscription scam occurs when a consumer is purchasing online and is tricked into buying additon productys or services, which he or she wouldn't, had they know the details.

CFR classifies post-transaction marketing as a scam because it is business model which built on deception. Sharing credit card information between companies is, unfortunately, still perfectly legal. That may change as the U.S. Senate Committee on Commerce, Science and Transportation investigates the practice.

How the hidden subscription scam works

You go to a website like Avon, Barnes & Noble, Budget, Buy.com, Classmates.com, GMAC Mortgage, MovieTickets.com, Priceline, Shutterfly, Staples, and Ticketmaster.You buy movie tickets, flowers or electronics, for example. You complete the transaction, and a page appears offering you cash back or free shipping. When you click the button a screen appears asking for your email address, which you provide and complete your transaction. 

In return for their cut, these companies pass consumers' credit card information to the post-transaction marketing firm.

Several months later, you see a charge for $10, $20, $30, or more your credit card statement from some company you've never heard of.

Who are the post-transaction marketing companies behind this scam?

The U.S. Senate Commerce, Science and Transportation Committee, headed by Jay Rockefeller (D-West Virginia), began an investigation in 2009 of the industry (the investigation is still ongoing). According to the committee,  the three biggest players in this business, having earned at least $1.4 billion in revenue over the past 10 years are:

• Affinion Group (which has more more than two dozen membership programs including Buyers Advantage, Travelers Advantage, and Identity Secure,)
• Vertrue, and
• Webloyalty.

Each is based in Norwalk, Connecticut.

 How do you get your money back?

If you paid with a credit card, and it is within 60 days of the purchase, dispute charge as soon as you see it. Ask your credit card company to withhold payment while it investigates. Note that you do not have the same protections if you paid with a debit card.

If the 60-day dispute window has elapsed, getting a full refund usually requires writing a letter to the company on statement (send it certified) and waiting months to receive a chargeback to your credit card.

1. Call the company associated with the charge on your credit card statement.
2. Be polite, but ask to cancel your membership and demand your money back.
3. If the representative refuses to refund your money or claims to be unable to, ask to talk with a manager.
4. Note the date and time of your call and the names of  any service representatives with whom you speak.
5. they will probably ask your to send the request in writing, via the mail (postal service, not email).

What is the government doing to stop these companies?

In January, 2010, Affinion, Vertrue, and Webloyalty agreed to alter their online offer pages. The companies now require consumers to enter their 16-digit credit card information a second time to signup for a membership.

• Affinion:
  • Affinion has been sued by the attorneys general of 16 states, and also by the attorney general of Florida (PDF) separately.
  • Affinion (formerly Trilegiant) paid $25 million to settle a nationwide class-action lawsuit in 2008 for allegedly billing and collecting unauthorized charges from consumers for products or memberships that consumers never requested or consented to receive.
• Webloyalty:
  • Webloyalty is currently under investigation by the attorney general of Connecticut.
  •  Webloyalty agreed to settle a class-action lawsuit in 2009 in which plaintiffs alleged that the company had defrauded them. Webloyalty agreed to adopt a number of changes to the way it markets its loyalty programs, as well as to repay $10 million to consumers.
• Vertrue:
  •  Vertrue has been sued by the attorneys general of California, Florida, and Iowa. Vertrue was formerly known as MemberWorks.

New York attorney general Andrew Cuomo issued subpoenas to 22 e-commerce retailers to demand information about their use of the three post transaction companies:

• Avon.com,
• Barnes & Noble,
• Budget, Buy.com,
• Classmates.com,
• Columbia House,
• Expedia.com/Hotels.com,
• FTD.com,
• Gamestop/EB Games,
• GMAC Mortgage,
• Hotwire.com,
• Intelius,
• MovieTickets.com,
• 1-800Flowers.com,
• Orbitz.com,
• Pizza Hut,
• Priceline.com,
• Shutterfly.com,
• Staples.com,
• Ticketmaster.com,
• Travelocity, and
• Vistaprint

Who are some of the other companies and websites using post transaction marketing companies?

In addition to those noted in the subpoena above, as of the writing of this article, March 2010, these companies were also reported to be customers of one of the three post-transaction marketers:

• Fandango
• US Airways

How to Avoid Getting Scammed in the Future

The ways in which they trick you into signing up are not necessarily obvious, so take care by:

• Watch out for words like "free," "cash back," and "rebate" on any Web site, even big, popular websites.
• If the terms and conditions are complicated, confusing, or hard to read; there's probably a trick in it - better to buy somewhere else!
• Look for pre-checked boxes during the checkout process. Uncheck any that are clearly what you want!
•  Don't use a bank debit card when shopping online. Debit cards do not provide the same level of protection and right to cancel or appeal that major credit cards like American Express, MasterCard, and Visa do.  The federal Fair Credit Billing Act only applies to credit cards, not debit cards.

More information and latest news:

•  May 31, 2006 - Iowa Sues Vertrue For Consumer Fraud -
  MWI, Essentials, Secret Escapes Use "Free Trial Offers" To Lure Consumers. Iowa Attorney General Tom Miller charges the company has engaged in consumer fraud. He said a survey about 400 "members" found not a single one who was satisfied with the service.
• Classmates.com tied to more dubious marketing tactics - Social-networking site, Classmates.com is once again accused of misleading consumers. At a time when Classmates.com and parent company United Online are already mixed up in a congressional investigation, Classmates.com is attempting to settle a lawsuit that accuses the company of sending e-mails that duped users into believing the messages had come from old high school chums.
• Senate Committee Slams Abusive Marketers
• Vertrue Trial Opens in Iowa
• Webloyalty Named in Federal Lawsuit
•  Iowa Sues Vertrue For Consumer Fraud
•  Vertrue's "Negative Option" Sales Attract Scrutiny
•  Hard to Escape from Negative Option Marketing
• There's No Escaping Simple Escapes