Sen. John Rockefeller (D-WV) introduced the Restore Online Shoppers’ Confidence Act, a bill that aims to curb sales tactics used by third-party online affiliates.
Rockefeller introduced the bill May 19, shortly after the US Senate Committee on Commerce, Science and Transportation released a staff report outlining what it described as deceptive tactics used by companies. The report said the companies used the tactics to enlist consumers in services without their consent and make it intentionally difficult for them to receive money back upon request. The legislation specifically referenced Affinion, Vertrue and Webloyalty.
Legal analyst Linda Goldstein of Manatt, Phelps & Phillips, said the bill focuses on increasing consumer consent for any post-purchase messaging from third parties. The bill would force third-party sellers to obtain consumer information directly from the online buyer through a separate data-input and opt-in process than the buyer used for the original purchase, she said. Violation of any of the act’s parameters would constitute a violation of the Federal Trade Commission Act, Goldstein explained.
Goldstein who chairs the law firm’s advertising, marketing and media practice criticized the legislation, though.
“One of the unfortunate aspects is it was drafted through looking at narrow focus without considering ramifications on a broader scale,” she said. “If a consumer signs up for cable or utility service online, all of those transactions are covered by this bill and those merchants will be required to send notices before each billing, and huge administrative costs will be passed on to the consumer. From an industry standpoint, we welcome some legislation to stabilize the marketplace but regrettably, the bill goes beyond what was necessary to cure the abuses that Senator Rockefeller is focusing on.”
The companies cited as negative examples in the legislation could not immediately be reached for comment.
“We believe the substance of the issues cited were resolved when we voluntarily ended the marketing method known as post-transaction online data-pass in January,” wrote Mike Bush, director of PR at Affinion. “Consumers must now provide all 16 digits of their credit or debit number when enrolling online in any of our services… As with any business, we continue to look for ways to improve satisfaction and will review our business practices to make any appropriate changes.”
Webloyalty said in a statement that it is “committed to providing value to all online consumers who join our marketing programs, and to upholding the highest standards of fair conduct and transparent practices.”
“We believe that the practices we adopted in January 2010 – including requiring consumers to enter their full credit card information to enroll in our programs – represent significant enhancements to our business practices,” the company said in a statement.
