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E-tail Scrooges and how one woman defeated them

This is no "It's a Wonderful Life," but the thousands stung by Web marketing practices now under government scrutiny may find it a feel-good story anyway.

The nightmare of the mysterious debit card charges began this way for Caroline Butler:

She noticed that Privacy Matters 123, a membership program she had never heard of, was charging her $20 every month. She had no idea how to get her money back or even how to get the company to stop. All she knew was that they were draining the bank account used to help pay the medical bills for her 18-year-old daughter, a cancer patient. and Vertrue charged Caroline Butler (left) fees to join a membership program she didn't want. The money they took was supposed to pay medical costs for daughter JoAnna (right). Caroline Butler

Somehow, Butler, a freelance photographer from Paducah, Ky., unintentionally enrolled in the membership program during a visit to social-networking site,, she said. What Butler didn't know at the time was that United Online, parent company of, was one of 88 e-tailers that agreed to sell their customers' credit card information to at least one of three marketers: Webloyalty, Affinion and Vertrue, which are now under investigation by federal lawmakers.

Thousands of consumers have accused the marketers of duping them into signing up for membership programs and locking them into paying monthly fees. What makes Butler's story different is that the money taken from her was donated by friends and well wishers who wanted to help pay her daughter JoAnna's medical costs.

She also found an unusual way to get her money back.

After weeks of getting the brush off from customer-service representatives, Butler said she decided to go straight to the top. She didn't just track down Mark Goldston, United Online's CEO. She called up Goldston's wife. "That's how desperate I was," Butler said. "It was a long fight for the money. I didn't want to be belligerent. I just asked questions and the companies refused to give me any answers."

While Butler may have been reimbursed, it's safe to say most people who find themselves in a similar situation, aren't as lucky. The U.S. Senate commerce committee said last month that pocketed $70 million from selling credit card data to the marketers, whose practices Sen. John Rockefeller (D-W.V.), the committee's chairman, called a "scam." A United spokesman said he couldn't comment because he didn't know anything about Butler's case and company officers were unavailable during the holidays.

Hidden charges
Butler's story helps to illuminate a couple of important issues. First, as Web merchants begin tallying holiday sales, some well-known and respected businesses have never appeared more cynical, anti-consumer, or just plain unethical.

"Your husband is stealing from my daughter."
--Caroline Butler to Mark Goldston's wife.

For starters, check out David Pogue's column at The New York Times about Verizon and the telecom's decision to double the fees they charge customers who cancel their smart-phone contracts. Pogue also noted the existence of a mysterious glitch in some Verizon phones that causes users to be charged $2 if they accidentally hit one of the phone's arrow keys. Verizon explained to the Federal Communications Commission (FCC) that the new cancellation fees are fair and denied the $2 charges existed. At least one member of the commission says Verizon's explanation is "unsatisfying" and "troubling."

I mention Verizon because the $2 charge scenario sounds so familiar. There seems to be a new and alarming trend among tech and e-tailing firms on how to make a fast buck and the formula goes something like this: a merchant sneaks a few smallish charges into a customer's bill and then claims it was the customer's fault for, say, hitting the wrong phone key--or in the case of the controversial marketers--for not reading the fine print in advertisements. Next, the goal seems to be to make the process of obtaining a refund especially difficult.

According to Rockefeller and his committee, this was how companies such as VistaPrint, Continental Airlines, Fandango (owned by Comcast), 1-800-Flowers, Orbitz, Hertz, Shutterfly, and all pocketed millions.

Visitors to the Web sites operated by these companies would be presented with an advertisement as they finalized a transaction. The page is typically packed with text and the words "Free" or "Cash back reward" are written in large type. To many shoppers, it appears the retailer is offering a coupon or reward for shopping at the site. Tucked into the fine print, however, are the full terms, which state that by entering an e-mail address or creating a username at the page, a shopper agrees to join a membership program and pay between $10 and $20 in monthly fees.

The marketers have said that they do everything they can to inform consumers of the requirements and the practice is legal because the terms are all in the ad. Some e-tailers, at least initially, defended the marketers and said they provided a valuable service to customers.

That was before the government laid their hands on the marketers' internal e-mails, memos and reports. Investigators working for the Commerce committee uncovered a host of materials that show only a tiny percentage of the people who sign up for the membership programs do so intentionally. In a report released last month, the committee also illustrated how the ads trick consumers into joining. Since then, some of the merchants have been running for cover. Continental Airlines, US Airways, Priceline and VistaPrint have cut ties with the marketers.

That gets us back to Caroline Butler and the second lesson she helps to teach.

Mark Goldston, chairman and CEO of United Online, parent company of, which banked $70 million from marketing practices now under investigation by the Senate Commerce committee. United Online

Some of the merchants involved say that they receive only a small number of customer complaints about the membership programs. But the commerce committee provided evidence that showed the marketers labor to insulate retailers from complaints while the retailers do their best to look the other way.

In the case of United Online, it will be hard for the company's CEO to claim he didn't know some of his customers were unhappy about the membership programs. One brought her grievances into his home.

Give me my money
After Butler noticed the charges on her account, she wanted to find out how they got there, but her bank statement provided little information outside of an 800-number and a name: Privacy Matters 123. According to its Web site, Privacy Matters 123 is a "credit management and identity theft protection membership program." The government says the program is operated by Vertrue. To see what some consumers think of it, do a Google search for "Privacy Matters" and the word "scam."

Butler said when she called the 800-number, customer service representatives from the program were reluctant to provide any information about how she became enrolled, how she could get her money back, or even how to cancel. Vertrue representatives did not respond to an interview request but in the past have said that it's easy for unhappy customers to cancel.

That wasn't Butler's experience. She said she panicked when it became evident that Vertrue wasn't going to return the money. The account that Vertrue was drawing money from held the donations for her daughter. Butler said she doesn't remember doing it but she concedes she might have used the debit card at in error. She says she absolutely did not intentionally use it to sign up to Privacy Matters 123. By the time she realized what was going on, months had passed and Vertrue's charges had caused her account to be overdrawn. She said the combination of Vertrue and overdraft charges had cost her more than $900.

After weeks of badgering Vertrue's employees, Butler was told by one worker there to try, since it was that company that had given up her debit-card information to Vertrue.

Then, she got another break. As she watched TV one day, Butler said she saw a commercial for NetZero, the dial-up Internet service operated by United Online, parent company of There on her TV screen was Goldston, the CEO. She was fed up talking to functionaries. She consulted an online phone directory and learned that Goldston owned three homes in the Los Angeles area. She called them.

Eventually, Goldston's wife answered. Butler began to cry.

She told Mrs. Goldston about her frustration. She told her about her daughter's illness and how the money she lost didn't belong to her but was there to help JoAnna. She told her that if she didn't get reimbursed she would go to the media, even the Oprah Winfrey show if she had to, and expose them.

Click the photo and read a collection of CNET's stories on the marketing scandal.

"Your husband is stealing from my daughter," Butler recalled saying.

It worked. Not only did Butler get reimbursed, but she said she also received a written apology from

What all this means is that Caroline Butler is tough and refused to be pushed around by the likes of Vertrue and Mark Goldston. It also means that Goldston can't claim not to know that some of his customers are harmed by the practices employed by Vertrue and the other marketers.

What Goldston and all of the CEOs of the stores involved in this scandal need to do now is follow the lead of Goldston's wife: find some compassion, apologize and make amends.