Legal, e-commerce, Web 2.0
Class-Action Lawsuit Unfolding in Boston Against Webloyalty, Fandango, Priceline, and Various Web Retailers Alleges Widespread “Coupon Click Fraud”
Seth Shulman 12/19/07
Updated and corrected, December 21, 2007. For details on the revisions, click here.
It is every online shopper’s nightmare (that is, if you awake to know it has even happened). You’re at the computer buying movie tickets, flowers, or pet food and, after completing your purchase, an enticing pop-up comes on the screen offering a $10 rebate. You type in your e-mail address to take advantage of the offer and the next thing you know, wham! You just unwittingly transferred your credit card number to a company you’ve never heard of and enrolled yourself in a dubious “rewards” program charging you $10 per month in perpetuity.
Such is the scenario outlined in hundreds of pages of court documents filed in a sweeping class-action lawsuit against Norwalk, CT-based Webloyalty.com and online partners that include Fandango.com, Priceline.com, justflowers.com, and others that is slowly working its way to trial in the Federal District Court of Massachusetts in Boston.
A key phase of the legal battle, known as the discovery process, will start in earnest after the holidays but won’t likely be complete until late this spring. It requires Webloyalty to produce vast numbers of corporate documents, including e-mails and minutes from meetings, as well as to allow attorneys for the plaintiffs in the case to take testimony from company employees in legal depositions. The process could reveal some eye-opening details about Webloyalty’s online marketing practices and arrangements with an estimated 75 major online retailers.
No matter the outcome, the case is being watched closely in both legal and financial circles. Lawyers say the suit could help shape the way laws governing online transactions are interpreted and enforced. Investors note that Webloyalty’s type of business, known as part of the so-called “lead generation” field, is a tempting and profitable branch of e-commerce. But, they say, any revelations from the case about deceptive practices would certainly give many would-be investors pause.
Ben Edelman, an assistant professor at Harvard Business School who has served as an attorney and expert in litigation involving online advertising fraud, says the case is important because it addresses two key issues in online lead-generation practices. “First, is there any limit to what Webloyalty and others can put in the fine print? Second, might there be some practices that are so likely to deceive that they cannot be permitted, even if disclosed in the fine print.” On this last point, Edelman is focused on the way Webloyalty gets consumers’ credit card numbers without customers explicitly handing them over. “Usually consumers know they’re entering into a contract because a retailer requests a credit card number,” he says. “But Webloyalty implemented a remarkable alternative—getting users’ card numbers directly from other merchants, and beginning to charge users who never told Webloyalty their card numbers.”
The named plaintiff in the lawsuit, Joe Kuefler, a resident of Stow, Massachusetts, bought movie tickets from Fandango back in December 2005. He claims he was unknowingly enrolled in one of Webloyalty’s so-called rewards programs after clicking on a pop-up offer, later finding a recurring $10 charge on his credit card from “WLI Reservations Rewards.” Kuefler got his money back after complaining about the charge, but the lawsuit alleges that he never gave his credit card information to Webloyalty and didn’t realize he had subscribed.
The complaint alleges violations of the Electronic Communications Privacy Act, unfair and deceptive acts and practices, invasion of privacy, and civil theft. Since this is a class-action suit, Kuefler is, of course, not alone. His lawyers say that the more than 700 consumer complaints they have reviewed attest to the validity of their allegations. The Connecticut Better Business Bureau alone says it has fielded 1,048 complaints …Next Page »
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12/21/07 5:47 pm
I want to be included in the class action lawsuit against PriceLine !!!
How do I do this?
12/25/07 11:13 pm
I never signed up for anything like this, and I was charged $10 a month just like everyone else, I would like to be included in the lawsuit too! I was signed up without authorization after a purchase and a $10 discount.
1/1/08 4:39 pm
No where does this article mention the obvious blind-eye that Visa and Mastercard have been giving to this. Both Visa and Mastercard have policies forbidding this practice of sharing credit card information yet to my knowledge have not cut WebLoyalty off from accepting credit cards.
1/4/08 12:30 pm
I too have been scammed by these guys. I’m sure 99% of their “customers” never print 1 coupoun or take advantage of any discounts they may have. And you can’t find out what they offer without disclosing more personal information! If anyone knows how to join the lawsuit, I’m ready.
1/9/08 1:36 pm
I have also been scammed by these jerks. For two months they made a $10.00 charge against my credit card. I am most interested in knowing which company allowed them to have my credit card number. My credit card is Discover.
1/9/08 7:47 pm
I have been victimized by Webloyalty as well. I noticed there was a ten dollars deduction from my account since Oct. I contacted my bank and with the result, I had to get a new debit card. I am furious the fact that I could not access to use my debit card to purchase anything while I was waiting for a new debit card. I am glad to see there s a lawsuit against Webloyalty. It needs to be stopped!
1/15/08 4:47 pm
Same story here. I booked a flight on SkyBus out of Columbus, OH, then got a pop-up suggesting “you just ordered Skybus, get a $10 discount on your next purchase.” At no point am I asked for Discover cc# info, only that I submit my email address twice for “confirmation”. I get coupons for free pizza all the time that dont even require a purchase, so it seemed legit. But the rep at scamco insisted that entering my email constituted acceptance of their service. Nuts!
I feel bad for Skybus because they allowed this to happen. Frankly, I cannot believe this does not constitute fraud; it is certainly outright deception. Cleary there is a big difference between going to rewards.com website, which you must give cc info, and this utterly deceptive pop-up. I then looked at Skybus’ Privacy policy and it does say they use a third party billing service to process their ticketing. I have written to Skybus hoping they stop doing business with these scumbags.
1/19/08 10:20 pm
I received class action lawsuit paperwork in the mail, but thought it was a scam, so I destroyed it. Now I am finding out the “WLI* ReservationRewards $10 debit on 12 months of my VISA bill was bogus. I should not have thrown out the paperwork, because I saw on the news that I would have gotten a $25 rebate check because of that suit. Does anyone know how to request an additional copy of that paperwork?
3/7/08 11:31 am
Ok, add me to the Ripped List too …. Ordered flowers for my mother’s funeral (2/07) through ProFlowers.com and got scammed through Reservation Rewards for $120.00 taken from my bank account!
3/21/08 2:38 pm
Barbara, if you call the number on your credit card statement and put up a huge fuss, they will refund the money. I know, happened to me, too, through Fandango. :(
3/30/08 11:37 pm
I was just scammed through FTD. They claimed they didn’t know about it, though I’ve found complaints about FTD’s partnership with Webloyalty going back years. I’ve also read that the “partners” get their cut. Why else would they go along with it? They should be held responsible since they are essential to the scam.
4/2/08 2:35 pm
They got me too when I purchased flowers online through FTD.. Over $100 so far. I just called to cancel today when I noticed what has been happening to my account over several months.
4/8/08 2:18 am
Great article on this scam. Disgusting.
They got me too, through Allegiant Air’s Website. I don’t buy much online for this very reason.
The Reservation Rewards monthly “fee” is up to 12 bucks a month now.(March 2008) Fortunately, I caught it right away. When I called their number to cancel my so called membership and demand a full refund, the rep told me he’d refund the March 18th payment, but I would be charged for Aprilimmediately I said no way, the April 18th payment due date is over a week away! He attempted some lame excuse, I told him to forget it, I know what their company is all about and politely asked for the full refund again, he dropped the tough guy charade.
I called my credit card company to complain about this company, they seemed to know all about them and recommended to cancel the card immediately. What a hassle. I hope this is the end of it. Sign me for the class action if you need proof of more “victims”.
5/11/08 12:08 am
I caught Reservation Rewards billing me. Called them up and they agreed to cancel my membership. I told them that that wasn’t good enough and told them I planned to contact my attorney general. At that point they agreed to refund all my payments. I’ll be interested to see if they follow through. I may well sue them anyway in small claims court. It would force them to either come to my state or hire a lawyer at considerable expense. I also plan to tell Hertz that I will not use them again (they hooked me through Hertz).
5/21/08 9:56 am
I just bought some games for christmas, clicked a discount coupon and then charged 10 dollars a month on my card. After months of trying to figure out where my money was going I called the contact number…there is no easy cancellation button on their site. I have paid them 10 dollars a month for nothing for 6 months
5/22/08 12:32 am
They scammed me a couple of years back.I complained and got a refund .Since then I have been using a visa virtual CC with set amount for each online purchases I make, and everytime I see that $10off offer at checkout I click yes and use the coupon on subsequent orders from the vendor.So far over 15 times at Buy.com.
6/22/08 8:26 pm
I just discovered I’ve been victimized by Reservations Rewards for several months. Looks like they’ve been getting us for $10.00 a month since February. I think I bought some books online then. Tomorrow we’re calling to find out whats up.