7 ms·

Feds: Top e-tailers profit from billion-dollar Web scam

59 points by geuis 17y ago

Its a couple paragraphs down, but these are companies that have been found to sell your credit card numbers to 3rd parties. I have used Fandango for a long time, but never will again. "The government says the investigation shows that Webloyalty, Affinion, and Vertrue "trick" consumers into entering their e-mail address just before they complete purchases at sites such as Orbitz, Priceline.com, Buy.com, 1-800 Flowers, Continental Airlines, Fandango, and Classmates.com. A Web ad, which many consumers say appears to be from the retailer, offers them cash back or coupon if they key in their e-mail address."

ilamont 17y ago
So now we know how Classmates.com stays in business.
- patio11 17y ago
  Classmates.com exec to PM in charge of CPA offers: "I don't know how you sleep at night." Source: http://customerecosystem.wordpress.com/2009/11/02/why-zynga-couldnt-go-public-soon-enough-customer-ecosystem-weakness/ http://customerecosystem.wordpress.com/2009/11/02/why-zynga-...
  - brown9-2 17y ago
    Obviously the company as a whole, and not just the PM, learned to sleep just fine with all that revenue since this happened 7 years ago.
    - ableal 17y ago
      Yeah. Poor innocent CEOs have no idea, just no idea, where all those tens of millions of dollars are coming from. And they "are committed to the highest standards of ethical conduct in the workplace and in all business dealings and operations" (Orbitz, one of the named companies, at http://phx.corporate-ir.net/phoenix.zhtml?c=212312&p=irol-govConduct http://phx.corporate-ir.net/phoenix.zhtml?c=212312&p=iro...). Perhaps they can explain how this differs from a shopkeeper that stations a pickpocket at the till, handles him the customer's wallet, and divvies up the loot.
dhimes 17y ago
Whoa- I used 1800-Flowers to send flowers to my mom. I didn't fall for the loyalty garbage, but they spam the bejesus out of me. I guess I need to find someone else for these holidays.
- 3dFlatLander 17y ago
  Yep, same here. I got sick of the spam, and just started using local florists in my parents home town. They were more than happy to set me up over the phone.
  - dhimes 17y ago
    Good call. My local florist here went out of business.
  - juliusseizure 17y ago
    I always support the local business especially when dealing with something like flowers. If the local shop costs more, I can just send half a dozen instead of a dozen flowers. This is unlike electronics where you can't take home half an HDTV and are forced to shop at the big box stores.
flatline 17y ago
Get your movie tickets - yeah we'll sell your info - Fandango...
geuis 17y ago
I'm not entirely comfortable with some unknown editor changing my title for this story. Yes, in one manner this title is accurate. However, my original title was simply "Avoid these companies". I had a very specific reason for posting with that title, both in order to catch the reader's eye and to summarize the reason for my posting this link in a succinct manner. Additionally, after I posted the link I added a comment that more thoroughly explained the content of the article. That comment was removed, apparently, as I confirmed that it existed on this posting as soon as I posted it.
- flatline 17y ago
  http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html
  - geuis 17y ago
    Be as that may, my original comment stands.
    - jhickner 17y ago
      "You can make up a new title if you want, but if you put gratuitous editorial spin on it, the editors may rewrite it." Pretty simple.
- mixmax 17y ago
  The upside of a benevolent dictatorship, such as the moderators on HN, is that unsuitable submissions are killed, bad headlines changed, etc. This makes for a much better site, and keeps LOL cats, Ron Paul and politics out. The downside is that you may not always agree with the moderators. You're free to argue your case of course, and personally I think that's a good thing. Which is why I upvoted you, even thought I don't personally agree with your arguments.
  - geuis 17y ago
    Returned. I love the discussion and environment we have here, which is why I keep returning. A bit more openness would be good.
brown9-2 17y ago
Do these marketers actually sell anything? What do they claim that the consumers get out of the $9-12/month they pay for this "loyalty program"?
- pyre 17y ago
  It said that they tempt the customers to enter their email address with a promise of a coupon or discount. Maybe they email the customers with discounts? Or maybe they're even sneakier, and only give the discounts to customers that go to their website and plug in their email address.
dangrossman 17y ago
Campusfood.com has this on their site too after you order food from any restaurant.
guelo 17y ago
I'm not a cryptography expert but it seems like it would be possible to come up with a scheme where I don't have to provide my cc number to the merchant so they couldn't turn around and sell it. Maybe the merchant could provide a key that I could hash my cc number with and then Visa/Mastercard would verify it for a one-time or recurring charge.
- tlb 17y ago
  It doesn't work: many companies are already at the bottom of that tar pit.
- ableal 17y ago
  Some credit cards offer that service: you are registered with them, go to their site, get a one-use number with a charge limit you pick. You provide that to the merchant, the "card number" validates fine. In my corner, the banks have associated and offer a single site that covers American Express, MasterCard and VISA. (Site, in Portuguese, is here: https://www.mbnet.pt https://www.mbnet.pt )
tlb 17y ago
The article conflates selling marketing info with credit card numbers. Selling my marketing info (name, demographics & email) to companies who want to advertise to me is annoying, but not deeply wrong. Passing on my credit card number so a 3rd party can charge me for stuff I never wanted is deeply wrong. Credit card acquirers used to self-regulate that sort of thing, but clearly many of them are in on the swindle. Is there software that warns me about devious business practices, similar to anti-Phishing software? I'd install something that highlights & explains fine print or deceptive practices that have burned people in the past. I'd pay for a version that protected my kids. They're cautious about scammy offers, but it sucks that I had to teach them about it.
patio11 17y ago
This bites shareware developers in the hindquarters every once in a while. Typically, the payment processor that you're paying 8%+ to to represent your interests decides "Why charge $2.50 for this transaction when I can instead charge $2.50 and then get a $40 CPA from Scums R' Us?" Astonishingly when shareware vendors call them on it, they defend the practice. This is one reason I refuse to do business with any of them. I respect that many folks have a visceral dislike of Paypal, but Paypal has never tried to steal from my customers and tell me its right. Here are some blog posts about it. See, in particular, the comments for the justifications from their PR/CS people. http://successfulsoftware.net/2007/07/04/swreg-customers-beware/ http://successfulsoftware.net/2007/07/04/swreg-customers-bew... http://www.kalzumeus.com/2007/07/05/conflict-of-interest-payment-processors-vs-uisvs/ http://www.kalzumeus.com/2007/07/05/conflict-of-interest-pay... http://www.kalzumeus.com/2008/03/09/regsoft-scam/ http://www.kalzumeus.com/2008/03/09/regsoft-scam/ Every few months I get "reputation management" requests about that post. Apparently its on top of Google for something embarrassing to the company. Shucks.
- dangrover 17y ago
  I've gotten sales emails from TrialPay saying that I should offer it as a form of payment on my site. I refused, of course, because I'd imagine those people would be the worst customers and I'd probably get a bunch of support emails asking about canceling Netflix. I don't know why any software developer would go with them. The one company that does I've seen is Smith Micro, but they're kind of scammy anyway: http://www.stuffit.com/mac/expander.html http://www.stuffit.com/mac/expander.html
  - patio11 17y ago
    I know one guy who sells a zip utility who swears by them. That said, I'm with you: it strikes me as highly likely that the increase in my blood pressure will cost me a lot more than the marginal revenue gained. In addition to having confused customers to worry about, I simply do not want moral association with many of things sold via CPA offers, even on TrialPay (which is, by all accounts, an upright and honest company in a pond of scum).
- 17y ago
wallflower 17y ago
Recurring subscription fees are also at the core of the "Free CD of 5 ways to do X better if you pay S&H web sites". 1. Enter email to see video of "My top tip for doing X better" 2. Person who enters email gets offer to get CD of all of the tips (for S&H only) 3. The shady part here is by paying S&H with their credit card they click through on an agreement to be billed monthly for $Y if they do not cancel 4. A percentage of people do not cancel (possibly because they want new tips on how to do X better). This creates a monthly, recurring revenue stream. It seems very successful: http://www.microcontinuity.com/download/im-myth_micro.pdf http://www.microcontinuity.com/download/im-myth_micro.pdf I recall reading a book once where an AOL exec boasted they could probably put a popup-ad that said "Click here to pay $5 for absolutely nothing" and they would get clicks from their subscriber base.

59 points by geuis 17y ago

ilamont 17y ago

So now we know how Classmates.com stays in business.

patio11 17y ago
Classmates.com exec to PM in charge of CPA offers: "I don't know how you sleep at night." Source: http://customerecosystem.wordpress.com/2009/11/02/why-zynga-couldnt-go-public-soon-enough-customer-ecosystem-weakness/ http://customerecosystem.wordpress.com/2009/11/02/why-zynga-...
- brown9-2 17y ago
  Obviously the company as a whole, and not just the PM, learned to sleep just fine with all that revenue since this happened 7 years ago.
  - ableal 17y ago
    Yeah. Poor innocent CEOs have no idea, just no idea, where all those tens of millions of dollars are coming from. And they "are committed to the highest standards of ethical conduct in the workplace and in all business dealings and operations" (Orbitz, one of the named companies, at http://phx.corporate-ir.net/phoenix.zhtml?c=212312&p=irol-govConduct http://phx.corporate-ir.net/phoenix.zhtml?c=212312&p=iro...). Perhaps they can explain how this differs from a shopkeeper that stations a pickpocket at the till, handles him the customer's wallet, and divvies up the loot.

dhimes 17y ago

Whoa- I used 1800-Flowers to send flowers to my mom. I didn't fall for the loyalty garbage, but they spam the bejesus out of me. I guess I need to find someone else for these holidays.

3dFlatLander 17y ago
Yep, same here. I got sick of the spam, and just started using local florists in my parents home town. They were more than happy to set me up over the phone.
- dhimes 17y ago
  Good call. My local florist here went out of business.
- juliusseizure 17y ago
  I always support the local business especially when dealing with something like flowers. If the local shop costs more, I can just send half a dozen instead of a dozen flowers. This is unlike electronics where you can't take home half an HDTV and are forced to shop at the big box stores.

flatline 17y ago

Get your movie tickets - yeah we'll sell your info - Fandango...

geuis 17y ago

I'm not entirely comfortable with some unknown editor changing my title for this story. Yes, in one manner this title is accurate. However, my original title was simply "Avoid these companies". I had a very specific reason for posting with that title, both in order to catch the reader's eye and to summarize the reason for my posting this link in a succinct manner. Additionally, after I posted the link I added a comment that more thoroughly explained the content of the article. That comment was removed, apparently, as I confirmed that it existed on this posting as soon as I posted it.

flatline 17y ago
http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html
- geuis 17y ago
  Be as that may, my original comment stands.
  - jhickner 17y ago
    "You can make up a new title if you want, but if you put gratuitous editorial spin on it, the editors may rewrite it." Pretty simple.
mixmax 17y ago
The upside of a benevolent dictatorship, such as the moderators on HN, is that unsuitable submissions are killed, bad headlines changed, etc. This makes for a much better site, and keeps LOL cats, Ron Paul and politics out. The downside is that you may not always agree with the moderators. You're free to argue your case of course, and personally I think that's a good thing. Which is why I upvoted you, even thought I don't personally agree with your arguments.
- geuis 17y ago
  Returned. I love the discussion and environment we have here, which is why I keep returning. A bit more openness would be good.

brown9-2 17y ago

Do these marketers actually sell anything? What do they claim that the consumers get out of the $9-12/month they pay for this "loyalty program"?

pyre 17y ago
It said that they tempt the customers to enter their email address with a promise of a coupon or discount. Maybe they email the customers with discounts? Or maybe they're even sneakier, and only give the discounts to customers that go to their website and plug in their email address.

dangrossman 17y ago

Campusfood.com has this on their site too after you order food from any restaurant.

guelo 17y ago

I'm not a cryptography expert but it seems like it would be possible to come up with a scheme where I don't have to provide my cc number to the merchant so they couldn't turn around and sell it. Maybe the merchant could provide a key that I could hash my cc number with and then Visa/Mastercard would verify it for a one-time or recurring charge.

tlb 17y ago
It doesn't work: many companies are already at the bottom of that tar pit.
ableal 17y ago
Some credit cards offer that service: you are registered with them, go to their site, get a one-use number with a charge limit you pick. You provide that to the merchant, the "card number" validates fine. In my corner, the banks have associated and offer a single site that covers American Express, MasterCard and VISA. (Site, in Portuguese, is here: https://www.mbnet.pt https://www.mbnet.pt )

tlb 17y ago

The article conflates selling marketing info with credit card numbers. Selling my marketing info (name, demographics & email) to companies who want to advertise to me is annoying, but not deeply wrong. Passing on my credit card number so a 3rd party can charge me for stuff I never wanted is deeply wrong. Credit card acquirers used to self-regulate that sort of thing, but clearly many of them are in on the swindle. Is there software that warns me about devious business practices, similar to anti-Phishing software? I'd install something that highlights & explains fine print or deceptive practices that have burned people in the past. I'd pay for a version that protected my kids. They're cautious about scammy offers, but it sucks that I had to teach them about it.

patio11 17y ago

This bites shareware developers in the hindquarters every once in a while. Typically, the payment processor that you're paying 8%+ to to represent your interests decides "Why charge $2.50 for this transaction when I can instead charge $2.50 and then get a $40 CPA from Scums R' Us?" Astonishingly when shareware vendors call them on it, they defend the practice. This is one reason I refuse to do business with any of them. I respect that many folks have a visceral dislike of Paypal, but Paypal has never tried to steal from my customers and tell me its right. Here are some blog posts about it. See, in particular, the comments for the justifications from their PR/CS people. http://successfulsoftware.net/2007/07/04/swreg-customers-beware/ http://successfulsoftware.net/2007/07/04/swreg-customers-bew... http://www.kalzumeus.com/2007/07/05/conflict-of-interest-payment-processors-vs-uisvs/ http://www.kalzumeus.com/2007/07/05/conflict-of-interest-pay... http://www.kalzumeus.com/2008/03/09/regsoft-scam/ http://www.kalzumeus.com/2008/03/09/regsoft-scam/ Every few months I get "reputation management" requests about that post. Apparently its on top of Google for something embarrassing to the company. Shucks.

dangrover 17y ago
I've gotten sales emails from TrialPay saying that I should offer it as a form of payment on my site. I refused, of course, because I'd imagine those people would be the worst customers and I'd probably get a bunch of support emails asking about canceling Netflix. I don't know why any software developer would go with them. The one company that does I've seen is Smith Micro, but they're kind of scammy anyway: http://www.stuffit.com/mac/expander.html http://www.stuffit.com/mac/expander.html
- patio11 17y ago
  I know one guy who sells a zip utility who swears by them. That said, I'm with you: it strikes me as highly likely that the increase in my blood pressure will cost me a lot more than the marginal revenue gained. In addition to having confused customers to worry about, I simply do not want moral association with many of things sold via CPA offers, even on TrialPay (which is, by all accounts, an upright and honest company in a pond of scum).
17y ago

wallflower 17y ago

Recurring subscription fees are also at the core of the "Free CD of 5 ways to do X better if you pay S&H web sites". 1. Enter email to see video of "My top tip for doing X better" 2. Person who enters email gets offer to get CD of all of the tips (for S&H only) 3. The shady part here is by paying S&H with their credit card they click through on an agreement to be billed monthly for $Y if they do not cancel 4. A percentage of people do not cancel (possibly because they want new tips on how to do X better). This creates a monthly, recurring revenue stream. It seems very successful: http://www.microcontinuity.com/download/im-myth_micro.pdf http://www.microcontinuity.com/download/im-myth_micro.pdf I recall reading a book once where an AOL exec boasted they could probably put a popup-ad that said "Click here to pay $5 for absolutely nothing" and they would get clicks from their subscriber base.