Anyone who’s shopped online is familiar with the ‘confirm’ button. Sometimes it
says ‘yes,’ and sometimes it says ‘purchase,’ but the purpose is the same: by
clicking this button you confirm that you want to buy the product.
But Rockefeller’s investigation says you may be agreeing to
a lot more, too.
Rockefeller says consumers expect to know what they’re
paying for online merchandise, and they expect merchants to protect sensitive
personal information—like credit card numbers.
“That’s why it is so darn disturbing to me to learn though
our investigation that we’ve done in this committee, over 300,000 pages of
research, what’s happening to millions of American consumers everyday who are
shopping on the Internet,” he said.
“What’s happening is that many online
merchants have decided to betray their customers’ trust. For a few extra bucks
in profits, these merchants pass their consumers’ personal billing information
on to mysterious companies.”
These charges show up—about 10 bucks at a time—on credit card statements.
Without their knowledge, consumers are enrolled in some sort of membership
club. But they’ll never hear anything about it or receive any benefits.
“According to a report the Commerce Committee staff
presented to me about this problem, these online scams have made more than $1,400,000,000
through these tactics and charged more than 30 million American people,”
Rockefeller said. “That is a lot of money and simply outrageous to me, and
frankly I think it’s un-American and I suspect you share my views.”
Chris Hedges is an assistant attorney general with the West
Virginia Attorney General’s Office. He says the most common way these companies
scam is through fine print above the ‘confirm’ button, or hidden in the terms
and conditions. But there are other ways, too.
“Other ways they’ve been doing it is by having consumers
fill out rebate forms,” Hedges said. “If you fill out a rebate form, well, in exchange
you might be providing information or making a purchase that you don’t know
that you’re making.”
These rebate scams happen online, but through mail-order rebates, too. Karl
Shanholtzer of Huntington got stuck
when he went outlet shopping in Maryland.
“At a toy store, they had Kodak batteries, and I believe
that’s what it was, it says ‘free after rebate,’” Shanholtzer said.
“So we
bought a few packs of them, and it was four dollars or $4.50 or something. And
you go home and you fill it out and you send in your rebate slip and you get a
check and you deposit your check. Well, when you do, it enrolls you in a buying
service.”
Perhaps the most disturbing element of these scams is the complicity of banks
and retailers. Shanholtzer says when he endorsed his refund check, his
signature enrolled him in a monthly membership program. Then, Chase Bank
provided the company with his credit card information so they could begin
charging him.
The companies outlined in the investigation were Affinion, Vertrue, and Webloyalty. Hedges says his office
has received several complaints about Affinion. But oftentimes the companies
resolve their complaints themselves, so enforcement agencies don’t have to take
action.
“Companies like these have largely stayed under the
enforcement radar because they end up resolving lots of complaints,” Hedges
said.
“According to one report that we’ve read, the customer service call
centers that as consumers all of us would call with a normal, everyday
complaint, these call centers are dedicated almost completely to handling calls
from callers who are wondering why they have this charge on their credit card.”
But for everyone who calls to complain, demanding a refund, many never notice
the monthly charges. The report estimates the companies and their e-commerce
partners have raked in $1.4 billion so far.
Affinion--one of the companies named in the Senate investigation--released a statement after the hearing. “Affinion is proud of our long-standing history of complying with the highest standards, all appropriate laws, and the stringent guidelines set for the online marketers," James Hart, Senior Vice President, said.
"We have always offered clear and conspicuous terms of service agreements to our customers in all our programs which have provided tremendous value for millions of consumers worldwide."
Rockefeller's office says he plans to take legislative action against online scammers.