Visa targets online marketing 'scam'
Congress wanted credit card companies to do more to protect consumers from mysterious charges. Visa creates system to help ensure people know what they're buying.
Visa, one of the world's, is taking aim at "scam" marketing practices that were quietly used by some of the Internet's largest retailers in recent years.
Retailers will no longer be able to allow third parties to charge a customer's card without the card owner re-entering credit card information, Visa said Tuesday. This is Visa's response to one of the biggest scandals to rock online retailing in years.
Last year, the U.S. Senate Committee on Commerce, Science, and Transportationafter learning that thousands of consumers had complained about receiving mysterious credit card charges.
The committee concluded that millions of consumers werefor so-called loyalty programs with the help of companies such as as Classmates.com, Continental Airlines, , Orbitz, Buy.com, and many others. Lawmakers said during hearings that these merchants had made an unholy but profitable alliance with one or more of three so-called post-transaction marketing firms: Webloyalty, Affinion, and Vertrue.
Under most of the agreements between the marketing firms and retailers, an advertising page is presented to shoppers while they complete a transaction at the retailer's online store. Many shoppers say they entered their e-mail address and pushed a large "Yes" button on the ad because it appeared to be a $10 cash-back offer or coupon. Many of those who complained say they thought they were being rewarded by the retailer for making a purchase.
are the full terms of the deal. Customers are notified that by providing their e-mail address they are joining a membership program and agreeing to a monthly fee, typically between $10 and $20. Many people said they didn't see this notice.
Visa's new requirement is designed to send a "clear signal to cardholders that a second purchase is being initiated and protects them from questionable marketing practices," the company said.
With the government leaning on them, many of the merchants involved havewith the post-transaction marketers, which have also taken steps to alter their business practices. They haven't gone far enough, however, critics have said.