Today a Senate staff report prepared for Jay Rockefeller was released that details how “loyalty programs” harvest subscribers by purchasing ads on the “thank you” pages that are displayed after you complete a transaction with various online merchants, many of which you’ve heard of.
These Web loyalty programs, run by Affinion, Webloyalty, and Vertrue, have hauled in $1.4 billion in revenue and paid about $800 billion of that back out for ad placement. The Consumerist has a list of the 88 companies that have earned at least $1 million in this fashion.
Felix Salmon has more on the numbers and the ownership of the firms that are doing the scamming.
Xconomy has a page that illustrates changes Webloyalty made to comply with a settlement in a lawsuit filed against them. You can see how the scams work from the illustration. Basically, when you’re done with your transaction an add is displayed offering you a coupon or a special offer. I’ve seen them many times, but never clicked. When you agree to accept the special offer, you’re enrolled in a “loyalty program” that charges you a monthly fee after 30 days. Because of agreements the merchants have with these other companies, your credit card number is automatically given to the “loyalty” vendor. So people are accepting these offers without reading the fine print and subscribing to a service they don’t want or need. The next thing you now, weird charges are showing up on their credit card bills.
There are other scams, too. For example, Ben Stein makes ads for a “free” credit score reporting service that secretly signs you up for a $29.95 monthly subscription in exchange for accessing the free report. Felix Salmon has been all over this for a few months.
Update: For a somewhat unfiltered look at what WebLoyalty promises, check out this page at the Americart site. Americart is a third party shopping cart provider, and one of the “benefits” they offer is free WebLoyalty integration. If you add it, they’ll give you $100 for every 1000 transactions they process, which isn’t a very good deal compared to what you’re getting. Your customers get a $10 discount coupon so long as they sign up for one of WebLoyalty’s insurance programs. I feel gross just having read about it.