Affinion stops buying credit-card info from e-tailers
In a victory for consumers and a Senate committee, one of the marketers accused of duping Web shoppers into joining paid programs drops much-criticized practices.
Affinion Group, one of three Web marketers accused of misleading consumers into signing up for membership programs and paying monthly fees, has vowed to do away with some of its most controversial practices.
The post-transaction marketing firm informed the U.S. Senate Commerce Committee that it will no longer acquire credit-card numbers and other information from anyone else but a card owner, the Commerce Committee announced Friday. From now on, Affinion will require a consumer to input their own transaction before the company will sign them up to a membership program or charge their card.
Affinion and competitors Vertrue and Webloyalty are accused by thousands of consumers and the Commerce Committee of tricking people into signing up for the membership programs and locking them into paying monthly fees of up to $20. The government alleges that to carry out their schemes, the marketers paid e-tailers to obtain their customers' credit card information. One merchant, United Online, parent company of Classmates.com, has earned $70 million, and counting, via the three marketers.
The marketing companies have denied any wrongdoing.
Be that as it may, they have been doing plenty of backpedaling since the government began its investigation and revealed that the vast majority of people signed up to these membership programs unwittingly. Affinion's pledge to stop buying the credit card info from retailers, a system known as "datapass," is a victory for the committee and its chairman, Sen. John Rockefeller (D-W.Va.).
"I am pleased that Affinion has agreed to change the way they do business," said Rockefeller in a statement. "These companies charged millions of consumers' credit cards without ever obtaining the billing information directly from consumers. While Affinion's decision to end the so-called 'datapass' process is a positive step, this investigation is ongoing and will not end until all online shoppers are protected and online datapass marketing has been stopped."
Under most of the agreements between the marketing firms and retailers, an advertising page loaded with text and fine print is presented to a shopper while he or she completes 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 and they didn't think they needed to read the fine print.
But that's where many of the key terms are buried. That's where it says that by entering an e-mail address or username, a consumer agrees to join the membership program and pay monthly charges.
Two things to remember here. First, Affinion may have had an epiphany and wanted to move forward in a spirit of cooperation. But it must be noted that the company's decision to stop charging credit credits without the consumer's input comes only after numerous embarrassing revelations about its business were made public and after several top customers--including Priceline, VistaPrint and 1-800-Flowers.com--ended it's relationship with Affinion.
The second thing to consider is that Rockefeller said the investigation continues and won't end until consumers are protected. Presumably, Vertrue and Webloyalty are still operating as usual. To fully protect consumers, the government must outlaw the selling of consumer financial information by merchants.