Senate to disclose findings in Web 'mystery charge' probe

Numerous shoppers have traced mystery credit card charges to Webloyalty, Affinion, and Vertrue. Congress will reveal the results at a hearing Tuesday.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
3 min read

Tuesday could turn out to be an embarrassing day for a score of online retailers, such as Continental Airlines, FTD, and Classmates.com.

Expect Sen. John Rockefeller, chairman of the Senate committee looking into "deceptive practices" by companies operating online loyalty programs, to be highly critical of the retail stores that do business with them. U.S. Senate Commerce Committee

The so-called mystery charges that have appeared on some of their customers' credit card statements will come under scrutiny at a hearing held by the U.S. Senate Committee on Commerce, Science and Transportation.

At the center of the federal probe are Webloyalty, Affinion, and Vertrue, companies that make "cash-back" and coupon offers to consumers and charge them monthly fees to enroll in their loyalty programs. The reason the government is involved is that for years, scores of online shoppers have asserted they were signed up for the programs without their consent.

It might be in your interest to watch the Webcast of Tuesday's hearing if any of this sounds familiar to you:

An ad pops up just as you're completing a transaction at an online retail site. It's packed with fine print and it's not easy to see how to get past the page to complete the purchase. What is clear is that all it takes to move off the page is to enter an e-mail address. A shopper may think that entering an e-mail can't hurt them. It's not as if some marketer has their credit card information.

But what those who enter their address are often unaware of is that they are authorizing the retail store to allow Web Loyalty, Affinion, Vertrue, or other similar marketers to charge their credit cards. There are cases where shopper don't discover the monthly charges on their credit card statement for months.

"The economy is hurting so many families today and we need to provide them as much relief as possible," said Sen. John Rockefeller (D-W.Va.), the committee's chairman. "Thousands of American consumers have been complaining about these deceptive practices and asking for answers. There could be many more affected by these hidden mystery charges."

Affinion, Webloyalty, and Vertrue have all denied any wrongdoing and argue that their services offer users savings and are valued by many subscribers. They will not be represented at Tuesday's hearing, according to a Senate staffer but are expected to appear at a later hearing.

In August, as the government's investigation rolled on, Webloyalty announced that it would alter it's ads to require that consumers "enter the last four digits of their credit or debit card to confirm" they wish to pay the membership fees. Last week, Affinion made similar changes.

During the hearing, when the Senate committee is expected to make public the results of a six-month investigation, it will also likely say the alterations made by Webloyalty and Affinion don't go far enough. The committee is also expected to publicize how much money the marketing companies are paying their retail partners.

What would be interesting to learn is how long the average Affinion or Vertrue customer stays in the program. If it's relatively short and there's high turnover, then that might indicate the company is signing up unwitting people instead of those seeking to join them.

Note: To access the Webcast of the Senate hearing on the mystery charges, go to the Commerce committee's site here at 11:30 a.m. PST.