by Joseph Kenny | 12/27/09

The US Commerce Committee Chairman in the US Senate, John D. Rockefeller, has posted a press release on 3-December-2009 announcing letters have been sent to three companies asking for more information about online marketing tactics. The focus of the inquiry is club memberships charged to consumer credit cards in cases where the consumer was not aware he or she had agreed to the charges. The three companies who are currently employing questionable and aggressive marketing tactics on a large scale and involving membership clubs are Affinion, Vertrue, and Webloyalty.

These particular three companies partner with online retail sites that are considered to be reliable. After customers buy products online they proceed through the checkout process. It is at that point where consumers find the opportunity to sign up for discount club memberships. Unfortunately many, if not most, of the consumers don’t realize they are inadvertently signing up for the club membership when they are asked if they want a reward. By agreeing to accept the reward offered the consumer is actually agreeing to join the membership club.

When many people find out they have joined is when they get a credit card statement with membership fees on it. The only way this could happen is if the online retailer gives the consumer’s personal information to the membership club vendor who then charges the credit cards. The retailers participating in this include big names like Pizza Hut, US Airways, Continental Airways, and Travelocity.

Senator Rockefeller is holding hearings to investigate these marketing tactics. He believes that this practice is misleading and wants to write legislation putting an end to the passing of private and personal billing information to other retailers without the knowledge of or explicit agreement by the consumers.

Rockefeller has gone as far as to call the marketing tactics in questions as “scams”. It’s a large problem with over $1.4 billion in membership club fees being charged to credit card annually. Over 30 million Americans have been affected. Obviously the 3 credit card companies being investigated understand that selling consumer billing information is unethical and possibly fraudulent because Affinion and Webloyalty have already stopped the practice ahead of legislative changes.

The proposed legislation would simply put a stop to the selling of consumer billing information called “data pass”. Rockefeller has sent letters to Visa, MasterCard, and Visa asking them what they know about “data pass” and unauthorized charging of consumer accounts. It appears that millions of unauthorized charges appear on these credit cards.

What this boils down to is that consumers should not be charged by any company they have not directly given their billing information to. Yet it happens all the time. This is a good reminder that credit card holders should look at their statements closely and be able to explain every charge. It is estimated that at least 4 million consumers have no idea where the membership fees are coming from or why it is showing up on their statements.