I am so glad the government is investigating all of these get rich membership scams. thanks to Ina for her coverage…
Auctionbytes-NewsFlash, Number 2163 – November 19, 2009 – ISSN 1539-5065 | Next Story
eBay and Vendors Included in Senate Probe of ‘Consumer Manipulation’
By Ina Steiner
November 19, 2009
Reading AuctionBytes: eBay and Vendors Included in Senate Probe of ‘Consumer Manipulation’
uyers on eBay and Half.com were among those exposed to companies that are now under investigation by a United States Senate committee for exploiting consumers’ expectations about online shopping to trick them into joining their membership clubs.
According to the Senate report, Affinion, Vertrue, and Webloyalty and their ecommerce partners earned over $1.4 billion in revenue with their "misleading" tactics. The report includes Half.com and eBay vendors and sellers as companies that partnered with these firms, including ChannelAdvisor, Buy.com and Tiger Direct. Vendio also participated in the Webloyalty program as recently as July.
While consumer complaints were rampant over such programs (WebLoyalty was the target of a class-action lawsuit filed in Massachusetts in 2006), the compensation for participating in such programs was apparently too good to pass up, for some. For example, the Vendio terms inform sellers if they participate in the Web Loyalty program, they become eligible for a credit to their Vendio account for $10 for every 100 completed checkouts.
In 2006, AuctionBytes reported that Marketworks had "opted in" eBay sellers into using WebLoyalty on its third-party checkout that eBay buyers and consumers used to complete transactions. At the time, we reached out to one of eBay’s biggest sellers, Adam Hersh, to find out why he offered WebLoyalty to his buyers through the Marketworks program.
Mr. Hersh said that he had received only one complaint in 2-3 years out of over 100,000 transactions, and said he earned 10 cents on each transaction when buyers go through the checkout process. He did not respond to our email inquiry on Wednesday.
We asked eBay on Wednesday if it was aware of third-party vendors’ use of the WebLoyalty program on third-party checkout for eBay transactions, and whether it took any action to prevent this from happening or continues to this day. We also asked about Half.com being named in the Senate report. eBay did not respond by press time.
AuctionBytes also reached out to numerous eBay vendors to find out what they thought of such programs and whether they participated – see table below.
After our story ran in 2006, there was a class action lawsuit filed in US District Court in Massachusetts accusing Webloyalty.com of engaging in a "coupon click fraud" scam, a lawsuit that it ultimately settled.
Eric Best, CEO of Mercent, said his company has never participated in such programs, but said retailers might be impressed by demonstrations that turn out to be less appealing in practice. He said implementation of such programs most likely varied among retailers, and guessed that some of the participating retailers ensured consumer transparency.
According to the Senate committee investigation, "Almost no one receives the "cash back award" that Affinion, Vertrue, and Webloyalty offer to online consumers at the time of enrollment."
These scams need to stop. It makes the honest sellers look bad.