Several prominent retailers issued investigative subpoenas by authorities in New York for linking to “deceptive” web discount clubs also offer the clubs access to their online shoppers in Canada.
Ticketmaster, Budget, Staples and Avon are just a few of the 22 companies in all who received a slap on the wrist by New York Attorney General Andrew Cuomo Wednesday for allowing third-party rewards club companies Affinion, Vertrue and Webloyalty to hijack shoppers from their website for the legal but “deceptive practice” of charging them hidden membership fees.
In most cases, shoppers are invited to receive a discount on their purchase by signing up for a free trial membership. Once the offer expires, users are automatically charged a membership fee on a monthly basis until they phone the rewards provider to cancel.
Canadian online forums are rife with complaints over the practice. One shopper who posted a note at Smartcanucks.ca said he was prompted with a membership offer during a monster truck event purchase through Ticketmaster.
The Better Business Bureau of Canada accredits none of the three Internet direct marketing firms and all have been accused of improper conduct before.
The Better Business Bureau gave Vertrue a grade of ‘F’ for failing arbitrate disputes and has said it has at least 2,714 complaints against it. Affinion and Webloyalty received grades of ‘B+’ and ‘C+’ respectively.
After a U.S. Senate committee accused the companies of acting unethically late last year, all three began requiring customers to re-enter all 16 digits of their credit card number before they are signed up as members. Before that, they obtained payment information through purchases on retailers' website.
A spokesperson for Canada’s Competition Bureau said for privacy reasons he was unable to confirm whether the companies were also under investigation in this country.
The companies subpoenaed in New York include Barnes & Noble, Orbitz, Buy.com, Ticketmaster, MovieTickets.com, FTD.com, Shutterfly, 1-800-Flowers.com, Avon, Budget, Staples, Priceline, GMAC Mortgage, Classmates.com, Travelocity, Vistaprint, Intelius, Hotwire, Expedia, Hotels.com, Columbia House, Pizza Hut and Gamestop/EB Games.
Some of those companies, including Fandango, Vistaprint, Priceline, Expedia and 1-800-Flowers.com and Barnes & Noble said they have already taken action to distance themselves from the practice.
