Congress targets aggressive online marketing tactics
Linda Lindquist was in Atlanta, where she had taken her 19-year-old daughter for therapy after a skiing accident left her a quadriplegic, when she decided to treat the teenager to a movie.
After she ordered tickets online, a coupon offer appeared on her computer screen, urging her to click for $10 off her next purchase. That one mouse click, unbeknownst to Lindquist, sent her credit card information from a reputable Internet ticket retailer to another company, which began billing her card monthly, adding up to $320 in charges for a “membership club” before she noticed and canceled the payments 16 months later.
Stories like Lindquist’s have enraged members of Congress, who are now considering legislation that would crack down on what they call the unethical, aggressive sales tactics of some Internet marketing companies.
Lindquist testified at a hearing Tuesday, where the Senate Commerce Committee unveiled the details of a six-month investigation into Internet advertising companies that Chairman John D. Rockefeller (D-W.Va.) said mislead and manipulate consumers into providing their credit card numbers, resulting in millions of dollars in profits for the companies and countless “mystery charges” for consumers.
“American consumers shouldn’t have to worry that their favorite websites are ripping them off during the checkout process,” Rockefeller said at the hearing. “It’s not ethical, it’s not right, and it’s not the way business should be done.”
The investigation, launched by Rockefeller in May, found that millions of Americans are unwittingly enrolled in membership clubs created by three online marketing companies: Affinion, Vertrue and Webloyalty. The companies and their partners have earned more than $1.4 billion by exploiting online shoppers through aggressive sales tactics, according to the investigation.
The tactics include inserting cash-back offers that never materialize into the checkout procedure of those partners.
The three companies under scrutiny said they have already responded to the investigation by making changes to their online practices, including requiring consumers to enter the last four digits of their credit or debit cards to authorize charges.
Prentiss Cox, a law professor at the University of Minnesota and a former assistant attorney general in charge of consumer enforcement in Minnesota, urged senators to consider outlawing the sale of someone’s personal information from one company to another.
The committee sent letters this month requesting information from 16 of the most well-known companies that have partnered with Affinion, Vertrue or Webloyalty.
Among the businesses are Hotwire.com, Pizza Hut, MovieTickets.com and Continental Airlines.
“This is nothing short of theft,” said Ray France, a former U.S. paratrooper who served in Iraq and Afghanistan. France testified that he’d been billed $19.99 a month without his permission after visiting a popular people-search website.
“My country promised to take care of me when I returned home,” he said. “But without laws to govern these unethical practices, instead my country is allowing me to be taken advantage of.”