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
(Page 2 of 2)
against Webloyalty over the past 36 months and gives the company an “unsatisfactory record” due to what it calls “a pattern of complaints concerning deceptive marketing/selling practices and unauthorized charges to consumers’ credit cards.” Even those figures only hint at the level of customer dissatisfaction. A cottage industry of on-line sites like Ripoff Report warn about the alleged scam. In fact, a Google search on “Webloyalty fraud” garners an eye-opening 10,500 hits.
For their part, Webloyalty principals argue strenuously that the company has done nothing wrong and that it adheres to all federal and state laws governing online transactions. “We intend to fight this case,” Rick Fernandes, Webloyalty CEO and co-founder, said in a phone interview last week. “As this goes forward we will show that the allegations in this case are not true.” Fernandes and Webloyalty spokesperson Beth Kitchener stress that Webloyalty offers customers clear and sufficient information online detailing the rewards service they sign on to. As Fernandes puts it: “We have the screen pages to prove that customers were notified about the price points and services we offer.” Fernandes also brushes away questions of complaints by stressing that his firm offers cancellations “without questions” to any subscriber who calls to complain. He maintains that, on many websites, his company doesn’t ask potential subscribers to enter their credit card information because the service “comes off the back end of an online transaction” they have just made. “We want to make it easier for customers,” he says.
Legal or not, Webloyalty’s business plan is proving undeniably effective. Fernandes says that his company’s seven separate rewards programs—including “Reservation Rewards,” “Shopper Discounts and Rewards,” “TravelValues Plus,” and “Wallet Shield” (a so-called credit monitoring and identity theft protection program)—are subscribed to by “millions of people each year.” And just last week he was named by Silicon Alley Insider as one of the year’s 100 most influential people in New York’s digital business community.
Webloyalty’s swelling subscriber list has made it one of the fastest-growing firms in the country. Although privately held, the company disclosed revenues of $143 million in 2006, and it ranked 202nd on Deloitte and Touche’s 2007 Technology Fast 500 list of the fastest-growing technology, media, telecommunications, and life sciences companies in North America. The rankings, based on fiscal year revenue growth from 2002–2006, reveal that Webloyalty grew 860 percent during this period. While most of the company’s arrangements with its clients remain undisclosed, its business strategy seems to be based on convincing major Web retailers to work with it by offering them a percentage of the consumer revenues Webloyalty receives.
Massachusetts law prohibits lawyers in an ongoing case from commenting publicly in ways that might influence a jury. But several lawyers involved in the case, who asked not to be identified, said that they believe the action could potentially set an important precedent about exactly what constitutes “sufficient notice and consent” in an e-commerce transaction. Along these lines, company documents filed in the case claim that Webloyalty sends e-mail notification to consumers who enroll in its programs, but the lawsuit alleges that the e-mails are specifically designed to get caught in spam filters so many subscribers never see them. That way, the suit alleges, the credit card charges can often accrue for many months before consumers even spot them.
The case schedule indicates that the suit will likely drag out all through next year and beyond. The deadline for the submission of documents in the legal discovery process has been set for May 26, 2008. We’ll be sure to follow along. In the meantime, the case stands as a reminder of what an untamed jungle online commerce can be—and how unsettled the pertinent case law is about it. With the height of the holiday season at hand, online shoppers would do well to exercise caution, and to scrutinize their credit card bills each month for any suspicious or unauthorized charges.
“The Internet is a relatively new medium, and people need to learn and adapt to how it operates,” says Webloyatly’s Fernandes. In the end, Fernandes himself offers online shoppers perhaps the most useful advice when he warns: “People should pay attention and not just click through offers on their screens.”
Share
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.
9/18/08 2:22 pm
I would like to be included the class action lawsuit against priceline.com. They ripped me off 528.00 without my authorization/
How do I go about becoming a part of this?
10/8/08 2:11 pm
I just discovered Reservation Rewards scammed me out of $260.00!
So what was the outcome of this lawsuit?
10/8/08 2:24 pm
I forgot to mention, Reservation Rewards received my personal information from an online catalog, Collections Etc.