Webloyalty Customers Eligible for Payments Under Class-Action Settlement

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the number of members who file an eligible claim,” Kitchener points out. “We cannot speculate on what that number will be at this time.” She says the company is notifying eligible customers about the settlement terms via e-mail, hard-copy letters, and advertisements in USA Today.

Meanwhile, Movietickets.com, Orbitz, Hotels.com, and many other consumer websites continue to display the company’s rebate offers, earning them what Webloyalty calls post-transaction revenues every time someone signs up. Because the class-action suit ended in a settlement rather than a legal ruling, it didn’t ultimately lead to a clarification in the laws governing this kind of online marketing, as some observers had hoped it might. However, Webloyalty did agree in the settlement to a number of changes in the way it pitches and administers its discount programs.

One of the changes relates to what was probably Webloyalty’s most controversial practice: getting shoppers’ credit card numbers from the merchants where they had just made purchases rather than asking them to provide credit card information explicitly during the signup process. Many consumers complained that because Webloyalty never asked for their credit card numbers directly, they didn’t realize they were signing up for anything. In the settlement, Webloyalty agreed to require users to manually enter the last four digits of their credit card numbers before joining a discount program.

How Webloyalty Is Changing Its Marketing Offers Under the Settlement AgreementOther changes in Webloyalty’s marketing as a result of the settlement include making billing details plainer when customers are signing up to receive rebates, making it easier for customers to cancel their subscriptions, providing toll-free customer service numbers in all e-mails, and ridding offer pages and advertisements of words like “award” and “reward” that suggested to some that the discount programs were free of charge. (See the graphic at left for a complete rundown of the changes Webloyalty is making to its offer pages. Click on the graphic to see a larger version or click here to see a full-size version.) Webloyalty will also pay $2.7 million in attorney’s fees to the lawyers in the class action case.

Meanwhile, separate from the class-action settlement, West Virginia Senator Jay Rockefeller, chair of the Senate Commerce Committee, is leading what he calls an “e-commerce ‘mystery charges’ investigation” into the practices of Webloyalty and other discount-program providers such as Vertrue, which is also based in Norwalk, CT. In May, the committee requested documents from the companies regarding what Rockefeller’s office calls “unauthorized charges,” and in late July it subpoenaed Vertrue after the company allegedly refused to provide relevant papers. (Vertrue says that it requested the subpoena, and that it would not hand over private customer data without one.)

“People in West Virginia and across the country are struggling more than ever to keep up with their mortgages, bills and other financial obligations,” Rockefeller said in a statement on the Vertrue subpoena. “If online consumers are being charged without their knowledge for services they don’t want, that is extremely troubling to me and has to be stopped at any time—but especially in the midst of this difficult economic climate.”

But Webloyalty, for its part, seems to be seeking lessons from the experience of the class-action suit. “We make every effort to be straightforward in our offers, allowing consumers to make educated choices regarding the products and services they purchase,” Kitchener tells Xconomy. “The Internet is a dynamic medium and, as Internet marketers, we must and do constantly evolve our approaches based on the input we receive from clients, members and other interested parties.”

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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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