Class-Action Lawsuit Unfolding in Boston Against Webloyalty, Fandango, Priceline, and Various Web Retailers Alleges Widespread “Coupon Click Fraud”

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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  • Diana

    I want to be included in the class action lawsuit against PriceLine !!!

    How do I do this?

  • 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.

  • 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.

  • Eric

    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.

  • JanetP

    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.

  • Scam Victim

    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!

  • Another

    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.

  • Patty

    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?

  • Barbara

    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!

  • Becky

    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. :(

  • Martin

    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.

  • Joe Hastings

    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.

  • yet another

    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”.

  • Will Pitt

    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).

  • Debbie Jones

    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

  • scott

    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.

  • Don Leslie

    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.

  • 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?

  • I just discovered Reservation Rewards scammed me out of $260.00!

    So what was the outcome of this lawsuit?

  • Mark

    I forgot to mention, Reservation Rewards received my personal information from an online catalog, Collections Etc.

  • Ken

    Unbelievable, this scam is like the Energizer bunny, it keeps on going.

    Someone has mentioned that Visa and Mastercard turn a blind eye to this dreadful scam. How about the fact that Deloitte Touche has “honored” this company for making huge profits by preying on unwilling participants. Let them share the shame.

    http://www.webloyalty.com/about-customer-loyalty/news-events/press-release/fast50-2006/

  • After a complaint to the BBB, and filing complaints with my DA and Attorney Generals office’s, Reservation Rewards has refunded the money they stole from me! Jerks need to be put out of business!! I also contacted Collections ETC, and informed them that I would NEVER do business with them again for taking part in this scam!

  • Joshua I.

    This is unbelievable. I just realized I have been getting scammed for $12 a month as well. I purchased tickets from Fandango for the first and last time about 5 months ago and they have been getting me since. I remember Fandango OFFERING A REBATE FOR MY PURCHASE!!!!!!!!! So I accepted it! How can anyone in their right minds accept that as an invitation to take my credit card information and charge me a monthly few. This is just unbelievable and unacceptable. I’m applying to law school soon, and I would love to be involved in this lawsuit as well. This kind of bull just fuels the passion I have to get into law school and put an end to this crap.

    $86 MILLION IN REVENUES LAST YEAR?! I just can’t believe it, they have millions of subscribers!!!! How can this happen? How many of those subscribers actually know they are subscribed? Even if that number is only %15 these people should be thrown in jail for stealing like this. We get Martha Stewart for insider information, but these people are allowed to stick their sticky little fingers into our wallets without even telling us? I’m sorry, I didn’t read the disclaimer either, along with the millions of others out there who according to this moronic company need to “pay attention.”

    And I agree with the other posts about visa and mastercard. I’ve been scammed through my bank account, and I will be having a word with Bank of the West tomorrow. This scam report is all over the web, and these financial institutions just take a blind eye to this all?

    In the economy we are in today, this company is making millions off stealing information and money from people who have little to spare. Fandango, Expedia, and all of the companies who are in partnership with them should be subject to this lawsuit as well, this is unacceptable for these companies to give away our information like this.

    At a time when something as precious as consumer confidence can drive the market up drastically or to its all time lows, as we have seen in the last few weeks, these prominent companies like Fandango, Expedia, Pricline, and all who are affiliated with WebLoyalty are allowing something as shady as this to be happening? Is this what we get for living in the kind of media centric world we live in today?

    THIS IS FRAUD, PLAIN AND SIMPLE.

    Can anyone tell me what the hell Webloyalty has been doing for me all this time? I purchased $20 tickets to see Batman about 5 months ago, and have been charged $48 so far (as far as I know). And what in that amount of time has WebLoyalty done for me? What have I received in return? A rebate coupon that I never used that was for only $10? Who in their right mind would not call this theft?

    I will spend as long as it takes to do as much as I can to put an end to practices like this. I don’t even care about the $48, even though I will get it back. But its not about that, its about the fact that someone could just put their hand in my pocket without me knowing it, and the companies that I put my trust in are the ones that put these sticky fingers in my pocket in the first place. What does this say about the movie business? Nobody can afford to go already, and we actually can we end up getting screwed and losing even more money that we couldn’t afford in the first place to see the movie?

    I will admit, this was a smart idea, so far it has blossomed into a great scam. But just like all good thieves should know, you have to know where to draw the line. The fact that this company thought that they could get away with this for this long, and to have accumulated the amount of money they have in the process? Are you kidding me? I am ashamed for falling for this scam and not noticing it until now, but I would be far more ashamed if I didn’t put my foot down to bring an end to injustices like these.

  • Daniel Butler

    I have been a member of “Big Fun” all year because of a priceline purchase. I just threw their junk out, didn’t even pay it any attention. I’m waiting for my refund.

  • dave

    I was scammed through campusfood.com. Same thing as everyone else.

  • J

    I was scammed through allegiant air. I was charged two different $12 charges for two months ($48) – I emailled allegiant air to ask why they gave away my credit card info. I thought that was illegal.

  • steve

    Fandango Scam !I noticed on my AMEX bill that I have been paying 10 $ a month since APR 2007, so I have paid $210 dollars. They got my AMEX # from Fandango. Today, AMEX decided to refund my 6 months of the $10 per month, and told them not to bill the card again. I just thought it was something my wife had subscribed to me and she thought it was something I had set up. What a scam ! Why isn’t someone prosecuted ?

  • Elizabeth

    Here we go:

    Corporate Headquarters
    101 Merritt 7, Fourth Floor
    Norwalk, CT 06851

  • Penny Falgout

    They got me also. I just noticed that I have been paying the ten dollars for awhile thinking my husband was checking the bills. We are out about $120.00. I called a few times before I could even get the call to go through and was told it would be canceled next month and would get our money back. We’ll see won’t we.

  • I love my American neighbours to the south but what the hell is this? This kind of crap would not happen on a bonafide Canadian company Web site. I got tagged through Allegiant Air. And I blame Allegian Air!! Cancelled my credit card immediately though. Man, it’s stil the wild west down there LOL!

  • Michael

    If I read correctly:
    “We want to make it easier for customers,” he says.
    BUT: (he goes on….thanks to companies like his)
    “People should pay attention and not just click through offers on their screens.”

  • Bob

    I too ordered flowers from FTD. LUCKLY I happened to also check my Bank Cards Statement on the same day; only to find the ‘pending’Complete Savings/ Web Loyality charge.
    When FTD was contacted they agreed they are ‘partners’ with Web Lolality. Oh., if you have a PROBLEM you have to contact Web Loyality direct! F.T.D. can’t help you.
    I have contacted my States Attny. General as well as the BBB with Complaints about this F Rated Company’s actions!

  • JC

    I used the Fandango website for tickets in Nov 08, this week while looking over my DiscCard I noticed charges for SHOPPERDISCOUNT. COM 800-889-8776 CT and RESERVATIONREWARDS.COM 800-732-7031 CT at $12.00 each per month. When I called, they were very NICE and accommodating offering to credit all the charges for the 4 months without and fight what so ever!… It was “To Easy” as they say. I think they know they scam you and bill your CCs and if caught… rollover so you don’t file a complaint. My advise, get your tickets at the theater… you can get tickets at most places days in advance…. and Check you CC statements for past charges!

  • Jacob

    Seeing as I usually spot scams like this because they ask for personal information, and I was under the assumption that giving out personal information to third parties was illegal, I just threw my email address at them expecting the free 10 dollars for my next purchase at EBGames.
    This is incredibly dishonest and they’re basically stealing our money. If this lawsuit is still going on I’d love to be a part of it, just tell me where to sign up.
    I’m not usually one who supports any type of class action lawsuit, but this deserves action.

  • Josh

    I want to be included in the class action lawsuit against PriceLine !!!

    How do I do this?
    I just found that I have been charged from the third party company for 11.99$ a month for almost a year.

  • KC

    wss07@yahoo.com

    Contact me about the class action lawsuit, Priceline.com charged my Visa debit card with an unauthorized amount.

  • Anita Grubbs

    Please add me to this class action suit. It seems that every time I order something on-line or via phone, I get signed up for various shopper discount clubs. I am 81 years old and on a very fixed low income and the convenience of shopping online or via phone no longer is convenient when I have to expend so much time and energy trying to get the charges reversed and membership cancelled. I hope more class action suits happen. I also got charged for “Homeplay” and “budget Savers Mnth” $19.95 each. The others were “Reservation Rewards” and Shopper Discounts”. My daughter had the same problem Holly.Stallings@comcast.net. Add her too, please.

  • RB

    Just got an email announcing this suit. I assume that means that somewhere either I or my wife fell into this thing.

    Came here to check the validity of it. Guess it’s real…..why not be included, eh?

  • Interesting that none of the people admit that they did NOT read the ageement they received with the $10 dollar offer. Hope they don’t buy cars the same way

  • david

    I would like to join this lawsuit they have done this to me for close to 2 years.

  • rich

    Does anyone know whether or not “yoursavingsclub” is part of this suit?

    It appears I was signed up for this at the same time as Reservation Rewards. Granted “yoursavingsclub” is only charging $1.00/month compared to Reservation Rewards’ charge of $10.00/month. But still, any amount lost is unbelieveble and should be accounted for.

  • Shawn

    I just received the email today letting me know about the lawsuit coming this summer in June against webloyalty. However, I don’t know what “program(s)” I was enrolled in. How can I find that out?

  • todd

    Been getting scammed since July 08 for $12 per month…trying to get reimbursed now but it isn’t easy.

  • Joe Black

    This has been happening for a very longtime now, yet nothing in terms of getting the lawsuit dealt with, what does the American justice system need before following through on these things?? Honestly, it’s disgusting!

  • Leandro

    I cancelled my membership since March 2007, didn’t even use it what so ever, during that time was my Chase Visa, now they are deducting through my checking, how do they did that without me authorizing it. Kind of scary….

  • Kwame, Richmond, VA

    They are still at it.
    Any update on the lawsuit?

    I was a repeat customer of Buy.Com but I am glad to announce that this is the last time I will ever buy anything from Buy.com. I will advice everyone to thing twice about using the site or try to redeem any rewards program from them.

    Why?
    I bought a Digital Camera Canon PowerShot A590 IS 8 from Buy.com. Everything was excellent; transaction, shipping, product, etc. One month later I see a fraudulent charge on my credit card bill, apparently from Shopper Discount and Rewards. I dispute and follow through and it comes out that in trying to get a promised $10 coupon off for my next purchase, I have signed up for membership of Shopper Discount and Rewards. To the best of my knowledge I never did sign up for Shopper Discount and Rewards. I also halted the sign up process as soon as I realized that I have to enroll in something to get the rewards. Meanwhile, there was no mention of a monthly recurring fee. There was no terms of service (TOS) or anything I had to signal agreement. Just the initial step of entering my email and boom I am in. I did not complete the sign up and hence did not receive any discounts or coupons from them.

    I also did not give Shopper Discount and Rewards my credit card and other information. Apparently Buy.com is working with Shopper Discount and Rewards or is in collusion with them. The Customer Rep at Shopper Discount and Rewards Stacy with Rep ID 61091 confirmed that my information was received from Buy.com. I did not and have not authorized Buy.com to share my personal information with Shopper Discount and Rewards. I now have serious doubts about the credibility of Buy.com and their respect for their customers.

  • Well…here one for you not only did they get me once but twice. When I overdrafted and went into the bank to find out what the___, I found these charges that was supposed to have cancelled. The customer servie number only rang. Thank God For US Bank–they also tried to get a hold of this company and could not and gave back 3 months worth of charges, and the overdraft fees that occurred from this scam. Well we thought we had this blocked. Not so…6 months later I was bank at the bank starting all over. We closed my account, cancelled by debit card and reopened everything. What a mess? These company’s CEOs were eating cavier off all our money,while the rest of us were fighting to pay our overdraft fees that paid for their rich taste.

  • Arielle

    I can believe this!! I just checked my bank account from where I used Orbitz.com to book a trip for spring break. I booked it in Feburary and ever since, $12 per month has been drafted from my account. That is clearly stealing. I hope they really get the pants sued off of them. You can’t just take someone’s credit card numbers and use them, if I were to do that at my job, I WOULD BE IN JAIL!!

  • JTW

    I bought airplane tickets from Orbitz.com and go sucked into this scam. Ripped off for 14 months at $12 per month!

  • Charles House

    The class action suit against Reservation Rewards is a SCAM in itself. Only one class action suit can be filed at one time for any given company or situation. So, the company filed one against THEMSELVES to keep anyone else from making further claims. In the contract, it limits you to any further legal action, and will only return “up to 2 months worth of charges.” They will return 2 months worth of charges with a simple phone call. DO NOT sign up for the class action lawsuit. I was ripped off for over a year’s worth of charges. I went along with their little scheme, filled out all the mail-in paperwork they make you fill out, and I actually DID get my money back. The lawsuit WILL NOT return any more than 2 months worth of fees. Keep that in mind.

  • D Scott

    I purchased tickets through Fandango in Janauary 2009, my visa card has been charged $12.00 for the past 7 months to “ReservationRewards”. I called they said I signed up for a free movie ticket offer whihc I never received. Very deceptive and misleading business practices. I’d have more respect for them if they used a mask and gun to hold me up. I can only imagine how many people are being robbed by these creeps and don’t even know it. I hope somebody takes some sort of action against these guys.

  • SUPERSHUTTLE scammed me with this illegal action. I spoke with the General Manager at Supershuttle and she was very evasive. They share MY money. I wrote the CT Attoney General without results – guess they get a cut also.
    I hope this website (XECONOMY) does not scam my email address.
    Richard

  • Wade Roush

    Hello Xconomy readers:

    There is an update and resolution of sorts to this whole Webloyalty story now. A federal judge approved the settlement agreement in the class-action suit, and it went into effect this month. Consumers who belonged to any of Webloyalty’s discount programs between 2000 and 2008 are eligible for partial and in some cases full refunds for each program in which they were enrolled. And Webloyalty has agreed to a number of changes in the way it pitches its discount program.s See this new August 27, 2009 Xconomy story for all the details.

  • Amy

    Yet even after a suit they do the same thing! I was never offered any coupons or to sign up for any reward..I just find 12 bucks charged to my back account that made another check that would have cleared bounced…so this 12 bucks wound up costing me 82!!!!!..this law suit needs to be opened back up because apparently this company made enough to not even be bothered by the first!

  • Cheri

    I was scammed too, but got all of the money back. What I am looking for now is a list of the companies that they are partners with so I can discontinue doing any business with them. They are aware that this company is unethical and dishonest, yet they are still involved with them and no doubt sharing in the profits.

    Does anyone know where or how I can get this list other than reading millions of complaints to gather of the origin of the scam for each person?

    Thanks

  • roger s peterson

    I want in on this law suit. Supershuttle has the Reservation Rewards link. I never got any coupons and have been charged $12 per month all of 2009.

    Roger S Peterson
    916-624-1894
    Sacramento

  • Elaine A Rue

    Every month I go through my credit card bills and bank account charges. I don’t understand why consumers are not more aware of what is going on with their finances. Yes, I have been a user of reservation rewards, got my money back and did not click on any of there ads again. Consumers be more aware of what is going on with your accounts.

  • Steph

    Add me to the list of those who have been burned. 5 months of charges! I contacted the BBB and filed a complaint. They were very nice when I called them and said they’d refund my money but of course that is part of the scam! I just have this image of my grandpa or someone like him not realizing that his card is being charged when he can barely make ends meet to begin with. I don’t understand why they would be allowed to continue on with these deceptive practices. I will never order flowers online again and I, too would like a list of companies who do business with them so that I NEVER use them again.

    Elaine, you were a “user” of reservation rewards? Or you got your money back? Which one is it? Or do you work for them? Yeah we get it that we should be more aware but obviously the only way this company can get “members” is to trick them so stop defending them please. There’s a reason why they make the charges so small and that’s because they know people might miss them or it will take awhile. And there are a lot of elderly people who are prone to scams like this.

    Sorry but I didn’t realize it was ok for companies to share credit card information. And once I realized that this company was looking for extra information from me I cancelled out of the coupon they were offering me but apparently all it took was me clicking on the coupon which didn’t say anything about a monthly fee. Why would I pay $12 per month for a one time $10 coupon??? Gee, thanks for making it “easier” for me. If I ever encountered an employee of this company at a bar I would order a pitcher of beer just to dump it over their head. Now that might be worth $12.

    This is fraud, plain and simple and I plan on telling everyone I know about them and the companies they work with.

  • Dan

    Just realized I got scammed too. $120 I’ll be calling amex tomorrow to see how much I can get back.

  • I also was scammed and it looks like they have been doing this for years. Why is this not elegal. i purchased movie tickets from movieticket.com and was enrolled in this rewards program I had no Idea 12 dollers was being charged each month untill i called the number charging me it and asked some questions. These guys are theives so be carefull what you purchase on line and read everything. I would also like to be part of this class action suit…