Many E-Tailers caught in post-transaction processing scandal blame customers

According to a November 23rd story at many of the recent E-Tailers that were caught in the post-transaction processing scandal  blamed customers for not reading the terms of service.

According to the CNET article here’s what many of the companies said:

“Orbitz “does not pass on any personally identifiable customer information to third party vendors without their permission,” the travel site said in a statement.

United Online, parent company of FTD and, a company that the government said banked $70 million via the three marketers said: “We believe that our marketing practices provide clear disclosure. We do not transfer our customer’s credit or debit card information to third parties without our customer’s consent.”

Priceline said the terms of the deal have “been clearly and fully explained.”

This should play out quite interestingly, especially given the recent educational alliance between the FTC, VISA, and the BBB as well as the fact that the FTC and credit card companies are cracking down on deceptive billing practices which has resulted in many companies losing their merchant accounts.

There are easy solutions on both the business side and the customer side in situations like this.

On the business side you can:

  • Blame the customer
  • Take responsibility (assuming you did something wrong)

On the customer side you can:

  • Stop doing business with companies that violate your trust


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WebLoyalty, Click Happiness and Post-Transaction Sales Tactics

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 (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 example discussed above we potentially have the following three dangerous elements (from a consumer’s standpoint):

  1. A “Click Happy” customer…
  2. …with a sense of urgency (to get to the movies)…
  3. …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.”

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Icann ends agreement with the US government

The Guardian reported today that “Icann – the official body that ultimately controls the development of the internet thanks to its oversight of web addresses such as .com, .net and .org – said today that it was ending its agreement with the US government.”

NetChoice issued a press release applauding the U.S. Department of Commerce and ICANN for agreeing to new a framework for accountability.

This has led to what is likely to become a heated discussion at the WarriorForum here.

One of the more alarming predictions came from Dan Rinnert who stated:

“A couple years back, ICANN wanted to allow tiered pricing on domain name registrations, meaning that a registries could charge varying prices for registrations, including inflating the price based on the perceived value of the domain–something which could result in you losing your domain name if you couldn’t afford the increased fee, allowing the registry to effectively grab your domain name and auction it off to the highest bidder or whatnot.”

George Kirikos made a statement about this type of proposal back in August of 2006:

“Just to show one possible future, if PIR feels pressure or has a desire to clean up porn from .org, it could announce that (check its Alexa ranking) will have its renewal price be $1 billion/yr. If it takes 10 years to do it, many would wait, and it would not be considered “suicide” for PIR. Who will stand against that as “we’re protecting the internet and children from porn”, PIR might argue? Leaving this temptation in the contract will likely become a slippery slope, in my opinion, leading to profit-maximizing behaviour by registries to emulate .tv. Acting in the interests of their shareholders, registries are compelled to maximize profits.”

“Acting in the interests of their shareholders, registries are compelled to maximize profits” is of course the most disconcerting idea offered in George’s article, although I would imagine that a loophole like that wouldn’t get through or at least there would be a lot of counterveiling pressures if any of the worst-case scenarios in his write-up actually came true.

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