Internet marketer Webloyalty to pay $5.2 million to settle NY complaints about sales tactics

By David B. Caruso, AP
Tuesday, September 21, 2010

Internet marketer Webloyalty settles NY complaints

NEW YORK — An Internet marketing company has agreed to pay $5.2 million to settle complaints that it duped consumers into signing up for discount clubs with tough-to-notice monthly fees., based in Norwalk, Conn., also has agreed to give some of its customers refunds and permanently abandon some of its past sales tactics, New York Attorney General Andrew Cuomo announced Tuesday.

The settlement is similar to one announced last month with another promoter of discount clubs, the Affinion Group.

Both companies had come under fire from Cuomo and other regulators over tactics critics called deceptive.

The basis for those complaints was a practice in which Internet shoppers were presented with cash-back offers on the websites of major retailers. If shoppers accepted the offers, they would be enrolled in trial periods for discount clubs offering things like cheap movie tickets in exchange for small monthly fees.

Some shoppers complained that they either never saw or misunderstood the fine print and only realized they had joined paid services after small charges began appearing on their monthly credit card bills.

Webloyalty said in a statement Tuesday that it was “making it easier for consumers to know what they are buying and how they are paying for it.”

In January, it began requiring customers to enter their full credit card numbers during the enrollment process.

Previously, if consumers entered their e-mail addresses and clicked on a button that said, “Yes, sign me up,” their billing information was passed automatically from the Internet retailer. That confused some customers who assumed that if they were never asked for a card number, they would never be billed.

A number of online retailers that had allowed Webloyalty to piggyback on their websites also have agreed to pay a collective $3.3 million in penalties, Cuomo’s office said.

The largest amount, $1.2 million, was paid by the travel reservation service Orbitz. Orbitz Worldwide has said previously that it had revamped the Webloyalty sign-up process as a result of the complaints. Orbitz ended the program in early 2010, “so we are confident this settlement should put any remaining concerns to rest,” company spokesman Bryan Hoyt said.

Shutterfly Inc., which operates an online service for storing, sharing and printing photos, agreed to pay $952,200. A spokeswoman did not immediately return a request for comment.

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