NY AG Investigating Online Discount ClubsBy: Mike Sachoff - January 27, 2010
New York Attorney General Andrew Cuomo said today his office is investigating 22 online businesses that deceptively link consumers to fee-based membership programs that charge unauthorized fees for discount offers.
The investigation found online shoppers are unknowingly directed to a membership program seller’s website that is separate from the online retailers site. Information about joining the membership program and its consequences, including the fact that the consumer is agreeing to transfer their credit or debit card information, is buried in the fine print and cluttered text.
Cuomo said his office has reached an agreement with online movie ticket retailer Fandango to end similar practices.
"This online scheme has impacted the finances and tried the patience of tens of millions of consumers nationwide. Well-known companies are tricking customers into accepting offers from third party vendors, which then siphon money from consumers’ accounts," said Attorney General Cuomo.
"I commend Fandango for doing the right thing by ending the practice of sharing consumers’ financial information with these discount club sellers. I expect the other businesses to follow Fandango’s lead and adopt these reforms to protect consumers who shop online."
Cuomo has sent subpoenas to 22 businesses that have deals with the three major companies that offer these discount programs: Webloyalty, Affinion/Trilegiant and Vertrue.
The subpoenas seek information about retailers’ practices of sharing consumers’ account information with membership program companies; their knowledge of any deceptive solicitations; and compensation from the membership companies. The merchants being investigated include: Barnes & Noble, Orbitz.com, Buy.com, Ticketmaster.com, MovieTickets.com, FTD.com, Shutterfly.com, 1-800Flowers.com, Avon.com, Budget, Staples.com, Priceline.com, GMAC Mortgage, Classmates.com, Travelocity, Vistaprint, Intelius, Hotwire.com, Expedia/Hotels.com, Columbia House, Pizza Hut and Gamestop/EB Games.