Buyer Beware: Pop-ups tricking Online shoppers

Minneapolis, MN -- Pop-up coupons and surveys on otherwise legitimate online sites are duping customers into joining shopping clubs, according to U.S. Sen. Amy Klobuchar.

"There are some cyber Grinch's out there that are trying to take people's money this holiday season," Sen. Klobuchar told reporters Tuesday at the University of Minnesota, "Consumers are being tricked into buying things they don't realize they're buying."

The practice, known as post-transaction marketing, is still legal. And yet, according to documents uncovered by the Senate Commerce Committee, the overwhelming majority of those who enrolled in the shopping clubs had no idea they had done so.

The cyber shoppers are typically surprised to see the membership fees show up on credit card statements.

"The pop-up is actually completely unrelated to the transaction, but they design it in a way that it looks like part of the transaction," Klobuchar explained.

"So people often click yes, but what they don't know is that they've just signed up for a club, and that their cards will be billed on a regular basis for this membership or service."

Klobuchar said the offers are popping up on otherwise legitimate sites, including 1-800-Flowers, Classmates.com, Continental Airlines, Priceline, Orbitz,  Pizza Hut, and MovieTickets.com to name only a few.

The shopping clubs go under the names Affinion, Vertrue and Webloyalty. They charge the membership fee to the same credit card number the customers use in the primary purchase they just completed.

"One of the most shocking things for me is these are legitimate web sites that have agreed to allow these fake clubs to go on to their web sites," the Minnesota Democrat added, "Because the fake clubs are paying them money to do it."

Hard to trace

The offers automatically pop onto the computer screen during the check-out process, after customers finish typing in their credit card numbers to confirm the purchase.  It's wedged in before the exit page, however, and at times is hard to ignore.

"It's not that easy to just to get out of the pop-up," University of Minnesota Law School professor Prentiss Cox said, "Often the easiest way to get that screen off your computer is to click it and just accept the survey."

Cox, a former deputy Minnesota Attorney General, is an expert on consumer fraud. He says profit is motivating both the pop-up artists and their willing host websites.

"Reputable retailers and financial institutions sell access to your account to direct marketers," Cox said, "They sell your account number. That circumvents our shorthand ways of signaling consent to a transaction and controlling our account."

This form of pop-up marketing generates billions of dollars for the companies, which can collect the fees without rendering any services.

Joining Klobuchar and Cox at a press conference Tuesday was Jim Sanderson of Minnetonka, who unwittingly joined one of the clubs while ordering concert tickets on Ticket Master's website.

"I started seeing this $10 charge show up on my Visa bill a couple months ago," Sanderson recalled, "It said something about rewards, but after a couple of months I figured this doesn't seem right."

As a software designer Sanderson considers himself fairly sophisticated when it comes to the Internet. But it took him many phone calls to trace just how and when he signed up for the shopping club.

That's not unusual, said Cox, because the clubs often delay billing. It then becomes tougher to connect the mysterious charge with a particular cyber shopping trip, or the legitimate site where the shopper accidentally joined.

"I got it cancelled," Sanderson said, "But in the meantime I've spent $50 on something I haven't seen or was aware of at all." 

Words of Advice

The Senate is considering banning the aggressive sales tactic. In the meantime the most Klobuchar can do is sound the alarm as holiday shopping season arrives.

"We're not telling people to stop shopping online," Klobuchar said, "We just want them to go slowly through the checkout process, and watch out for any pop-up boxes especially."

She also advised checking credit card bills often, to look for charges that don't seem familiar.

"And be aware of the difference between a credit card and a debit card," Klobuchar said, "Credit cards usually have $50 limits on your liability for unauthorized charges, but a debit cards tied to your bank account don't always have that protection."

Customers can cancel the membership and stop the charges once they discover them.  However, getting a refund is a tougher proposition.  Cox concedes that, technically, the pop-up lures include a full disclosure of terms in the fine print.

"But fully disclosing it doesn't mean it's not abusive," he said, "And you know it's abusive when almost everyone that's purchasing it is unaware of it."

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