CXO

Are on-line retailers using deceptive practices?

There are unique business arrangements between eSellers and coupon clubs. I didn't know that, did you?

A close friend of mine knows I'm anal when it comes to IT security. That's why she called yesterday asking me to check out a company called Webloyalty.com. She was receiving a monthly charge from them and didn't know why.

It appears that my friend is a victim of what many are calling coupon-click fraud. In fact, Webloyalty is involved in a consumer lawsuit where they are accused of deceptive sales techniques and unauthorized transfer of private credit and debit card information.

Who's involved

So what is coupon-click fraud? It has to do with relationships fostered between eSellers and post-transaction marketers. I wasn't quite sure what either was. Here's what I found out:

eSeller: An on-line merchandiser that is similar to the familiar brick-and-mortar retail store. Buy.com would be an example of an eSeller. Post-transaction marketers: Are companies that leverage the trust a consumer places with an eSeller in the hopes of selling something just after the original transaction is completed. Here is an example:

"Many customers who buy from affiliate (eSeller) sites are more likely to sign up for special tie in offers after the sale has been made. As most marketers will know, this works because customers who have already spent money are more likely to trust your store and sign up for related offers."

Coupon-click fraud

Now, back to the coupon click fraud. I found a telling article by Greg Sandoval of CNET News, where he detailed fellow CNET reporter Josh Lowensohn's trials and tribulations with Buy.com and Webloyalty in his post Buy.com, Orbitz linked to controversial marketers. It started:

"Last November, after almost completing a purchase at Buy.com, Lowensohn was presented with an advertisement that asked him for his e-mail address. He couldn't quickly find a way to get past the page and said he remembers thinking he would type in one of his rarely used e-mail addresses just so he could complete his transaction. Lowensohn was confident he couldn't lose anything because the advertiser didn't have his credit card information."

Lowensohn was wrong to assume that. Buy.com sold his private and financial information to Webloyalty. Doing so appears to be legal according to Buy.com's privacy policy, which states:

"Except as limited below, we reserve the right to use or disclose your personally identifiable information for business reasons in whatever manner desired."

The privacy policy continues:

"For some services, we either collect and transfer personal information to a service provider you have selected, or you may visit other merchants through links on our site who may collect and use your personal information."

Lowensohn by typing in his e-mail address gave Buy.com permission to transfer his credit card information to Webloyalty. Greg Sandoval does a great job of pointing out exactly what is shown on the post-transaction Web page, page one and page two.

Others are involved

By the amount of hits I get when running Web searches on coupon-click fraud, lots of people are upset about this. If you are one of them, Webloyalty just announced on their Web site that a settlement for the lawsuit I mentioned earlier has been reached. There were no details though.

Still, WebLoyalty is not the only company involved in post-transaction marketing. Vertrue a company similar to Webloyalty has caught the attention of the Senate Commerce Committee.

Final thoughts

Even if post-transaction marketing is legal, I feel it is important to inform as many people as I can about what seem to be deceptive practices. Both my friend and Lowensohn pointed out as much. It seems the slogan "Buyer Beware" is still valid.

About Michael Kassner

Information is my field...Writing is my passion...Coupling the two is my mission.

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