The United States Senate has requested information from Visa (NYSE: V), MasterCard (NYSE: MA) and American Express (NYSE: AXP) as part of a continuing investigation as to whether or not consumers were mislead into enrolling into online discount clubs.
“Consumers will only shop online if they are confident that their billing information will be used only for purposes they have authorized, said Sen. Jay Rockefeller (D-W.Va) in a letter sent last week to major credit card companies. He continued, “It concerns me greatly that the companies we are investigating have been able to acquire the credit and debit card numbers of millions of American consumers and bill them every month for services the consumers do not realize they have purchased.”
Sen. Rockefeller requested significant amounts of information from credit card companies, including whether or not consumers who enrolled in online discount clubs frequently requested in refunds of the monthly membership fees.
The investigation lead by the Senate’s Commerce, Science and Transportation Committee previously focused on just companies offering discount club services, including Affinion, Vertue and Webloyalty. The investigation also targeted dozens of online retailers including Orbitz and Fandango.
These “post-transaction” companies target consumers who have recently made purchases at retail sites by sending people pop-ups that offer discounts on future purchases. In the past, customers that have clicked on those ads were sent to sites where they could enroll in coupon programs by entering their email address and clicking a button. Online retailers then shared the customer’s credit card information with the post-transaction companies, who then proceeded to begin charging customers monthly fees between $9 and $12 and sending them coupons and discounts.
Many web users have reported that they did not realize that they would be charged a monthly fee for joining the discount club. Recently, a group of consumers filed a class-action lawsuit against Webloyalty and other companies. The lawsuit was settled for $10 million in August.
Senate lawmakers began investigating the practices in May and some online retailers have modified their procedures. For example, Orbitz now requires consumers to their enter 3-digit security code on the back of their credit cards when they sign up for a membership after making a purchase on the site. Web loyalty also recently revised its sign-up procedure to require consumers to enter the last four digits of their credit card numbers before joining their program. The company says it now sends at-least 5 emails during the initial 30-day trial period, before consumers are charged, and allows people to cancel their membership.
Both American Express and Mastercard said that they were cooperating with the Commerce Committee.
