The news has been full of reports of companies with online presences that are deceptively signing people on to fee-based membership programs. Now Attorney General Andrew Cuomo has decided to legally investigate a set of companies consumers say have duped them into membership programs they either didn’t know they were signing up for or didn’t understand had fees attached.
The companies that have been subpoenaed by Cuomo are well-known names too. They include Barnes & Nobel, Avon, Staples, GMAC Mortgage, Expedia, Pizza Hut, and Gamestop/EB Games to name a few. In all there are 22 companies being required to explain certain practices.
These companies have links on their websites that will take shoppers to membership program websites. Getting consumers to click on the links often involves deceptive practices in and of itself. For example, consumers are offered cash back on their purchases and when they click the link they are actually agreeing to join a membership club and agreeing to a transfer of credit or debit card information from the original website to the membership club website.
There is a fine print statement on most of the websites that explains the consumer will be accepting the membership when clicking on the link. But like the fine print in mortgage or contract documents, it is not obvious nor is it easy to understand. Many times it is simply overlooked.
Consumers find out they agreed to join the membership club when the charges start showing up on the credit card statements. The subpoenas have three goals. First, New York wants to learn what practices are employed concerning sharing consumers’ private account information. Second, New York wants to find out which companies purposely instigated these practices for the purpose of deception. Third, New York wants to lean what kind of financial arrangements exist between the original website and the membership club website.
Some of the membership clubs being investigated include Webloyalty, Vertrue, and Affinion. Some of the companies using “datapass marketing” have already agreed to stop sending consumer credit and debit card account information to other companies. Fandango and Priceline are two such companies. Barnes and Noble has already issued a statement stating it does not share its customers private account information with other companies.
All of the companies involved have said that no laws have been broken, but most have also agreed that changes to company policies and procedures will be made. That would seem to imply they understand the practices push limits of fair practices.
Consumers need to be careful when clicking on links and especially those that take them to new sites outside the site they are currently making a purchase on or browsing. Some websites now bring up a warning screen that points out the user is leaving the original site but it does not state that in doing the consumer may be making a purchase.
This is another warning about paying close attention to the fine print. Consumers who believe they are victims of deceptive marketing practices should file complaints with their state’s attorney general office. What happens as a result of the New York investigation is sure to have an impact on website shoppers in all states.
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Tags: Attorney General, Deceptive
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