TechCrunch has just published a post titled "Post Transaction Marketing Hall of Shame" with the subtitle "Hundreds of Well Known E-Commerce Companies Rip Off Customers"
From the TechCrunch article:
"Hundreds of well known ecommerce companies add post transaction marketing offers to consumers immediately after something is purchased on the site. Consumers are usually offered cash back if they just hit a confirmation button. But when they do, their credit card information is automatically passed through to a marketing company that signs them up for a credit card subscription to a package of useless services. The “rebate” is rarely paid."
How "Click Happy" can you get?
What immediately came to my mind was something I read from the FTC Negative Option Report back in February of 2009…
A "characteristic of people online involves what Professor Hillman and Mr. Grossklags described as “click happy” or exuberant Internet use. Specifically, users click through webpages quickly, without paying much attention because they want to complete a given transaction. Professor Hillman cited research finding that online shoppers “enter a seamless sequence of responses, a flow state in which their sense of time and reality become distorted and their self-control is diminished.” As a result, and as discussed in more detail below, users do not read or understand the terms of agreements they enter into online."
…which is interesting to think about in light of the report included in the TechCrunch article…"Aggressive Sales Tactics On The Internet And Their Impact On Americans" from the Committee On Commerce, Science, and Transportation's Office of Oversight and Investigations which presents a complaint in which Web Loyalty customer Chris Steffen was surprised to learn that he had been signed up for a membership to a program called Reservation Rewards which he concludes happened when he purchased movie tickets through MovieTickets.com (apparently as the result of a post-transaction sales tactic).
I think what is really insightful on Chris Steffen's part is contained in the complaint he sent to WebLoyalty (addressed to "Joni", the customer service rep he spoke with):
"Imagine yourself, Joni, getting on a computer to book movie tickets for the next big show and you're in a hurry because you and your friends decided to book movie tickets for the next big show and you're in a hurry because you and your friends decided to go at the last minute. You want to make sure you order your seats in time so you can have dinner before the show. Then, at first glance you get what looks like a coupon for 10 bucks off your next purchase of tickets. You don't read the fine print because you're in a hurry and next thing you know you're signed up for some worthless service."
In other words Chris Steffen is describing what might be considered a "self-imposed limited time offer" based on the need to take some other action (getting to the movies) quickly.
Interesting, because in the State of Texas' initial complaint against Infusion Media (Google Money Tree) one of the points included is that "the sense of urgency Defendants intentionally create discourages consumers from reading the disclosure."
Three strikes and your out (of more money)…
So in the MovieTickets.com example discussed above we potentially have the following three dangerous elements (from a consumer's standpoint):
- A "Click Happy" customer…
- …with a sense of urgency (to get to the movies)…
- …having their credit card information automatically passed to a third-party company that enrolls them into a membership program in which the customer incurs monthly charges.
Internet Usability Expert Jakob Nielsen and WebLoyalty CEO Rick Fernandez seem to disagree on how well disclosed the terms of the Reservation Rewards offer is:
In the video, WebLoyalty CEO Rick Fernandez claims that WebLoyalty is "trying to make this process as simple and as clear as possible for the consumer".
But even if they continued to use the post-transaction sales tactic (simple), wouldn't "as clear as possible" mean putting the details about the monthly charges right ABOVE the button the customers click that enrolls them in the offer?
One thing is "clear". Post-Transaction Sales Tactics are great for the bottom line:
According to the TechCrunch article on Post-Transaction Sales Tactics, "Affinion, Vertrue, and Webloyalty are the three largest companies partnering on these scams. The report states that these three companies have earned over $1.4 billion in revenue from 35 million transactions. 4 million people are currently enrolled in the plans."
Filed under Business News, Consumer Complaints, News by %s Comments. 
11/17/2009 Financial Fraud Enforcement Task Force
WASHINGTON—Attorney General Eric Holder, Treasury Secretary Tim Geithner, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro today announced that President Barack Obama has established by Executive Order an interagency Financial Fraud Enforcement Task Force to strengthen efforts to combat financial crime. The Department of Justice will lead the task force and the Department of Treasury, HUD, and the SEC will serve on the steering committee. The task force’s leadership, along with representatives from a broad range of federal agencies, regulatory authorities and inspectors general, will work with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims.
The task force, which replaces the Corporate Fraud Task Force established in 2002, will build upon efforts already underway to combat mortgage, securities and corporate fraud by increasing coordination and fully utilizing the resources and expertise of the government’s law enforcement and regulatory apparatus. The attorney general will convene the first meeting of the Task Force in the next 30 days.
“This task force’s mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening,” Attorney General Eric Holder said. “We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives.”
“Through the Financial Fraud Task Force, we are making clear that the Obama Administration is going to act aggressively and proactively in a coordinated effort to combat financial fraud,” said Treasury Secretary Geithner. “It’s not enough to prosecute fraud only after it’s become widespread. We can’t wait for problems to peak before we respond. We’re seeking comprehensive financial reform to create a more stable, safer financial system and stepping up our enforcement strategy. Doing so will help to stop emerging trends in financial fraud before they’re able to cause extensive, system-wide damage to our economy.”
“To give American families the protection and peace-of-mind they need, it’s clear the federal response must be as interconnected and multi-dimensional as the challenges we face,” said HUD Secretary Shaun Donovan. “No one agency is going to be able to stop financial fraud. This Task force will build upon many of the inter-agency collaborations already underway to protect consumers and restore confidence.”
“Many financial frauds are complicated puzzles that require painstaking efforts to piece together. By formally coordinating our efforts, we will be better able to identify the pieces, assemble the puzzle and put an end to the fraud,” said SEC Chairman Mary Schapiro.
The task force is composed of senior-level officials from the following departments, agencies and offices:
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the Department of Justice;
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the Department of the Treasury;
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the Department of Commerce;
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the Department of Labor;
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the Department of Housing and Urban Development;
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the Department of Education;
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the Department of Homeland Security;
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the Securities and Exchange Commission;
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the Commodity Futures Trading Commission;
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the Federal Trade Commission;
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the Federal Deposit Insurance Corporation;
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the Board of Governors of the Federal Reserve System;
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the Federal Housing Finance Agency;
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the Office of Thrift Supervision;
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the Office of the Comptroller of the Currency;
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the Small Business Administration;
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the Federal Bureau of Investigation;
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the Social Security Administration;
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the Internal Revenue Service, Criminal Investigations;
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the Financial Crimes Enforcement Network;
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the United States Postal Inspection Service;
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the United States Secret Service;
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the United States Immigration and Customs Enforcement;
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relevant Offices of Inspectors General and related Federal entities, including without limitation the Office of the Inspector General for the Department of Housing and Urban Development, the Recovery Accountability and Transparency Board and the Office of the Special Inspector General for the Troubled Asset Relief Program; and
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such other executive branch departments, agencies, or offices as the President may, from time to time, designate or that the Attorney General may invite.
In addition, the attorney general will invite representatives of the National Association of Attorneys General, the National District Attorneys Association and other state, local, tribal, and territorial representatives to participate in the task force through its Enforcement Committee.
Filed under FBI Releases by Comment.
Michael Webster, a commercial litigation attorney specializing in franchise and distributorship law has written a post about the recent lengthy post at ShoeMoney.com called "Dennis Yu – Rise and Fall Of a Con Man in the Affiliate Industry".
Michael's post, called What Is the Con Here, brings up a lot of interesting points that I missed that suggests the possibility of misdirection (my interpretation of Michael's post) going on in order to take focus off of the message and onto the messenger.
Perhaps I'm guilty of doing the same as well, but it's hard to not get upset when confronted with someone who has victimized the very type of people I try to help everyday – and who has profited handsomely from it.
But again – perhaps as Michael and Dennis Yu have suggested this only serves to take the focus off of the message. Yes, certainly the messenger needs to be penalized, make amends, etc., but for the sake of this post that's not the point.
Dennis Yu's follow up to all of this called "This is why you don't gossip on the internet" is also interesting and worth a read and I agree that when you come across attacks on a messenger that you need to "examine their motives and then check the facts to see if things add up".
I certainly don't feel like I have all the facts in this situation and I don't think it will be an easy matter to get them either.
Some might consider the rest of this post a distraction from the message and back onto the messenger. However, I think it's important as in this case as it may help people see the message as more pertinent and NOT allow it to get shoved under the table.
However, Dennis Yu does potentially clarify a couple things that I wondered about. I say "potentially" because at this point there's no way to check the facts.
1. Dennis Yu states, "We did some consulting for the FTC– a nice surprise, as they promised not to sue."
I had wondered why he was so willing to basically post a "signed confession to prove the prosecutor's case" as Lynndel Edginton observed in the original post called BlitzLocal CEO explains how to trick people.
Of course the dilemna for Dennis is if he testified or consulted for the FTC in a specific ongoing investigation then he can't say what the case was until charges have been filed. Once he can talk about those cases, things could get very interesting again.
2. He also states, "I’m owing up to all the spam (or call it by whatever name you want) that I’ve done in the past. The TechCrunch article was part of that– and there are more articles coming."
Why is this interesting? Because if it's true that there are more articles coming and they get published in major outlets with the same sort of prominence as TechCrunch then it puts Shoemaker's claim that "the jig is up" for Dennis Yu in serious doubt.
The bottom line is:
- We don't have all the facts and there will be serious facts that we possibly can't have for legitimate reasons for a while.
- We need to be on our guard for potential misdirection whether it comes from a hidden negative option offer or an attack on a messenger who is easy to hate.
Note: PLEASE keep in mind that I am only saying those two "bottom line" items are possible. I am NOT saying they are true. There simply isn't enough evidence to know one way or another.
Filed under Blog by %s Comments.
