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Innovation

New York examines Web marketing scam

Andrew Cuomo, attorney general for the state of New York, has launched an investigation into the marketing practices of 22 e-tailers, including Staples, 1-800-Flowers.com and Orbitz.
Written by Greg Sandoval, Contributor on
Andrew Cuomo, attorney general for the state of New York, has launched an investigation into the marketing practices of 22 e-tailers, including Staples, 1-800-Flowers.com and Orbitz.

Cuomo's office said Wednesday it issued subpoenas to the merchants and requested information about the retailers' relationships with three marketing companies, Webloyalty, Affinion and Vertrue. These firms have allegedly misled consumers for years into joining membership programs and paying monthly fees.

Webloyalty and the other companies are so-called post-transaction marketers that have compiled a long history of consumer complaints and class-action lawsuits. Typically, the three firms present pop-up ads to online shoppers when they're finalizing a transaction. Some consumers have said the ads appear to be a discount coupon from the retailer.

The ads offer discounts or cash back coupons if the shopper will only provide an e-mail address or username. Buried in the fine print however, are the full terms, which state that by providing an e-mail address, the customer is agreeing to sign up for a membership program and authorizing their credit card to be charged sometimes as much as $20 a month. How can these marketers charge credit cards without the owners giving them their card information? Simple, they buy it from well-respected merchants, such as Continental Airlines, Priceline and Buy.com.

For more on this story, read "New York examines Web marketing 'scam'" on CNET News.

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