Senate To Air Findings In Web "Mystery Charge" Probe

CNet reports on hearings scheduled to open tomorrow in the US Senate on mysterious charges on thousands of consumers' credit cards. The Senate Committee on Commerce, Science and Transportation has been investigating online loyalty programs, which shoppers encounter (often with little comprehension) on the sites of online retailers such as as Continental Airlines, FTD, and Classmates.com. "At the center of the federal probe are Webloyalty, Affinion, and Vertrue, companies that make 'cash-back' and coupon offers to consumers and charge them monthly fees to enroll in their loyalty programs. ... In August, as the government's investigation rolled on, Webloyalty announced that it would alter its ads to require that consumers 'enter the last four digits of their credit or debit card to confirm' they wish to pay the membership fees. Last week, Affinion made similar changes. During the hearing, when the Senate committee is expected to make public the results of a six-month investigation, it will also likely say the alterations made by Webloyalty and Affinion don't go far enough. "

Happened to me

[dbet]

I got a mysterious charge on my credit card. I looked up the company, and the only info I could find was hundreds of people complaining about that same company, and also some theories about how they were able to get people's credit card numbers (sites they're affiliated with, etc.). They were also "uncontactable". My bank had no trouble removing the charge, but to be safe I canceled my card and had a new one issued.

Re:It's a mystery

[Old97]

The "dubious" sites are well known legitimate businesses who pass your credit card information to their "partners" without asking your permission. So unless you consider all commerce on the internet to be "dubious", you've misunderstood the problem. Imagine if you used your credit card at a brick and mortar Best Buy store and they signed you up for AOL based on your signature on the charge slip - without explaining first what they were doing and insuring you understood. Oh, yeah, they've done that too.

Re:Customer Loyalty?

[guruevi]

Actually, these companies didn't even ask the vendors for it. In the beginning of this whole debacle the shop you buy from used a piece of software that handled the credit card transactions (as they should) similar to the PayPal gateway.

However, the unscrupulous owners of that gateway forwarded the credit card details to shops like WebLoyalty which would start charging you $10/month while they got a kickback. That's when they charged me $10. After enough people complained about it to VISA and the like (I found out after the first charge and cancelled all purchases from said vendor), they changed it to include a 'confirmation screen' which was a simple: would you like to get a 10% coupon next time you shop (Yes/No). Later they added the small letters (first you had to scroll down to it since it was conveniently located outside the visible area) which said they could charge you $10 or more per month.

I was included in a class action suit against WebLoyalty and they settled but after lawyers fees nothing was left (literally, I think it was a $10M settlement, lawyers fees were $9.5M and the rest was donated to charity).

Affinion == Scammers

[guyfawkes-11-5]

I know a few people who work for Affinion. They are a very shady company; this isn't the first time they have been investigated. The last go around involved scamming people by sending them $5.00 checks in the mail. If you cashed the check, it would enroll you in a program that would bill you monthly. Looks like they are up to their old tricks, just updated for the internet!

Re:Happened to me

[gad_zuki!]

That "smart" scammers have moved to the more unregulated world of cell phone charges. I got a text message from "Gamer data [complaintsboard.com]" about some cheat codes out of the blue one day and a 9.95 monthly service charge. AT&T was borderline unhelpful in removing it until I started yelling, I wonder what percentage of that 9.95 they pocket?

The FTC needs to crack down on Gamer Data and the rest and we need regulations that require some kind of authorization for these charges, like an AT&T rep or robot voice calling to verify.

Re:Could be fixed with a simple law.

[Archon-X]

GP doesn't know what he's talking about.

Firstly:
Both VISA and MC do not allow 'Cross Sales' between different merchants - that is, passing your CC to another merchant.

Now, these rules exist, but are not enforced, typically unless a merchant is abusing them [IE, selling the data, passing it on without disclosure, etc]
About 3 months ago MC came down hard, and started enforcing its rule, due to a large amount of abuse (probably relating to this incident)

Visa is also currently in talks of shutting down / rolling up abusive merchants - they met in Europe about it about 8 days ago.

Secondly:
To hold, store, re-use or transfer CC information, in theory you have to be PCI compliant, which is a fairly stringent process that ensures everything is encrypted, etc, CVV data isn't held [or if it is, you need a higher level of compliance] - security of the networks, machines, sites, etc are all tested.

Now that doesn't stop your gas station owner (or anyone that doesn't care about CC rules) from taking a copy of the info - but outside of that, this is very strictly controlled.

Re:Credit cards..

[IICV]

Because in America, credit cards are just about the only way to build up a good credit score. Without a good credit score, you end up paying much more for big purchases (if you have to take out a mortgage for them, which is usually the case).

I would be totally fine just using my debit card all the time - except that does nothing for my credit score, which means I have to use a credit card if I ever want to do anything outrageous like buy a house.

Re:It's a mystery

[pyster]

Cheap tickets passed my info along to webloyalty. I was billed, but was able to get the charges reversed by webloyalty with no issues. Classmates.com has also been known to do crap like this.

Re:Use a prepaid card

[turtleshadow]

Prepaid credit cards have limitations and you have to shop smart.
1) Most require some sort of activation fee that could be quite high.

2) Many are rejected when re-occuring, "overdraft," or secured payments are "possible."
I've been rejected when traveling and trying to use such a thing for pay as you go cell phone. The company defended saying "but what if you want more minutes?" My response was you cut me off anyhow with 0 credits by your policy and a stalemate occured.
Pre-Paids likely to be rejected when used for renting vacation vehicles like boats, scooters or bicycles. Somehow the system knows these card's aren't fully secured - the reality is you want X hours fun, the company wants X $'s of collateral.

3) Many online merchants do not process these cards correctly. I tried to buy a media CD package from a tech company, and found out that they at the time would charge me but wouldn't ship it to me because its not a full on credit card and wasn't able to be processed by their shipping dept. It was something about mismatch of verification of address. Trying to get a rollback of the charge was impossible by the bank or the company.

5) Any remaining small balance is near impossible to use or get back. Merchants weasel out saying because they are like gift cards they don't have to accept them for a purchase below a minimum. So if it has 3.75 left on the card the merchant can reject it for cause of a minimum $5 purchase (often restaurants). FInding a place and the right item that you can do cash+prepaid card is the only way to zero out the card.

6) There is typically a use it or lose it clause or monthly service that erodes your pre-paid's value if you don't use the balance. This is the lie that it costs many dollars a month for the company to track your prepaid card balance for you (I disagree).

7) Beware the clauses on lost/stolen pre-paid cards. They are often considered same as gift cards or cash and thus have no recourse than be a total loss unless you can prove by police report armed robbery or loss uncontrollable by you such as being car jacked.

It happened to me once..

[tirk]

I had this happen once from a movie ticket purchase on Fandango. Bought some movie tickets, then a week later got an $80 charge from some place I had never heard of. I made a very loud argument to Fandango about enabling my credit card number to be fraudulently used, etc, etc. Within 2 two days I had all my money returned and some extra for the trouble, several free movie tickets, and a promise from Fandango that they would change the way companies advertise when they are sharing financial information, and indeed they did. People just need to just stay on top of their accounts, understand their rights and loudly speak up your intention of fully enforcing your rights and usually that's all it takes.