Unwanted pop-up windows on behalf of third-party companies. Banners and hyperlinks begging to be clicked for confirmation. Interstitial pages that only disappear after ticking a box, or email addresses used as confirmation of enrollment in some travel club apparently required when buying an online airline ticket.
Sound familiar? Are these practices of cybercriminals? Well, not exactly, as these are the practices that some well-known and respected household-name companies have been legitimately using over recent years in a lucrative multibillion-dollar business.
Last week, the U.S. Senate Committee on Commerce, Science, and Transportation released a damning investigative report on "Aggressive Sales Tactics on the Internet and Their Impact on American Consumers."
This stunning report details the "clever ways" certain major corporations have been "manipulating consumers' buying habits so they can make a quick buck," according to committee chairman John D. (Jay) Rockefeller IV.
According to a press release on the report from the Democratic deputy communications director, the tactics of three companies in particular -- Affinion, Vertrue, and Webloyalty -- were shown to "exploit consumers' expectations about online shopping to trick them into joining their membership clubs."
Some companies use methods similar to those employed by online scammers and cybercriminals, such as utilizing adware and injected pages to entice customers into clicking on confirmation buttons. The companies may use the confirmation button from adverts promising "cash back rewards" as a go-ahead to pass along personal data obtained from customers, i.e., email address and payment card details, to third-party membership clubs. In turn, those clubs promptly set up automatic monthly fee withdrawals directly from the newly "enrolled" members.
In the majority of cases examined by the committee, the first time a "member" became aware of their club status was upon discovering a mystery charge on their card statement. This was without any recollection of joining a scheme and mostly without recognizing the name of the company withdrawing the money from their account.
The sums of money earned in revenue from these tactics are mind-blowing; a staggering 35 million online memberships have been instigated since 1999, with 4 million alone since June 2009; over 450 e-commerce Websites and retailers have partnered with these companies, raising their revenue to over $1.4 billion; 88 companies have earned over $1 million with one company.
A group of well-known corporations use Affinion, Vertrue, and Webloyalty -- e.g., Continental Airlines, US Air, VistaPrint, Orbitz, Priceline, and Pizza Hut, to name just a few.
Also last week, on the other side of the pond it was disclosed that U.K. service provider T-Mobile sold personal customer data for extra revenue without the permission of those involved.
The question surrounding personal data -- who should have access to it, and how it should be stored -- is an ongoing issue and not an easy one to solve. But revelations such as these are more than likely to be just the tip of the iceberg.
The Senate committee's report is welcome because it demonstrates that even though we rightly focus on cybercriminal activity as a priority, the online sales tactics and sales of personal data by well-known corporations and "ad networks" need to be scrutinized. If nothing else, the report may be the starting gun for a few class-action suits.
What we should find encouraging is that even though it has taken 10 years for the membership scam and illicit use of personal data to be even considered by the lawmakers, these issues are now being taken seriously -- at least in the U.S.
We have a hard enough job keeping cybercriminals at bay, without the added worry of not being able to trust Fortune 500 companies that we know and must interact with in our daily lives.
— Jart Armin, Editor of RBNexploit.com, a watch blog on the infamous RBN (Russian Business Network), and HostExploit.com
Not only are more and more 'legitimate' companies taking advantage of consumers using digitally deceptive means, even the largest of the large banks in America are reaching into customer's pockets with deceptive advertising and gimmicks.
Last year, I 'bit' on an offer from one of the country's largest banks to open an account and get a $100 reward for using their website to open the account. The experience was a nightmare, if not a digital joke someone was playing on me, either intentionally or by mistake. I suspect intentionally.
First, I could not get their web page to respond to my computer browser, and I could not initially get their customer service 'help' line to give any 'customer service', but after several hours of frustration finally was able to set up an online account.
Then I waited, and waited, and waited for six months...for the promised $100 bonus for opening an account. I then found out that the web design was flawed, and no one could get the reward without entering a code for which there was no place on the web site to enter said code.
Then 'customer service' said they would take care of the problem and credit the $100 to my account 'within a month'. Wrong!
After several more months of waiting, and hours on the phone, they sent me a $100 check in the mail, a full 10 months after opening the account.
Do I suspect there were instructions from Bank executives to customer service reps to delay customer requests for their $100 bonuses as long as possible? You bet I do!
Should we be going after the scammers themselves, the companies that somehow allowed them or both? Maybe in the short run, going after the companies that use the scammers is the easiest, but the scammers are simply moving somewhere else.
Michael-- thanks for the link (a few pages back, depending on how you're viewing this). The nature of this fraud was that you would go to flowers.com, select a purchase and then at checkout be presented with a "coupon" or some offer off a % on a future purchase. All you had to do was enter your email address, so the practice was pretty deceptive.
If you bothered to read the tiny fine print under the coupon offer, it revealed you were giving up the right to your info (credit card) to a third-party retailer. But who reads that lawyer speak? The prez of Orbitz brazenly declared "caveat emptor". While, of course, the masses are howling to Congress for respite.
Kurt-- thanks for that added site; I hate that stupid little man every time he comes on my television. I just want to break that guitar over his face. There is nothing "free" about freecreditreport.com and they should be taken down. Stupid jingle and all.
I am sorry to burst you bubble of naviete;but Money doesnt just Talk it barks in todays world.
And whether we like it or not,atleast in America it takes Money to get elected to any office of power-why do you think the US Government bailed out the banks first? And continue to plow them with as much support and assistance as they need ,while they continue to enrich their Employees/Shareholders/BondHolders,etc??? Thats because Bank Lobbyists who call the shots in DC are responsible for most if not all our Elected Representatives being and staying in place;through millions of Dollars in Donations.Thats why nothing much will change or come out of this financial crisis.
And the problems will continue to fester under the surface for a while before coming back a couple of years from now,worse and stronger than ever and end up Destroying the US Dollars Value.
I agree that it was about time somebody did something about this menace and its good to see these companies get sued so effectively in courts.But most of these companies and especially Webloyalty are always one step ahead of the privacy advocates.Lets say they shut down today they open up another a different name/theme but the Business model stays the same.
Its not exactly a healthy situation when so-called reputable Companies like Continental have to resort to such Unsavory practices.
Maybe we guys at IE could start a Blog/post about the most invasive companies so that we can them boycott them and not do any business with them?? That would definitely teach these firms do act better?? After all,Its always about the bottomline is'nt it???
This world is really unfair. It is sad that the rich would always exploit the less fortunate people to get more rich. I think that the government should take more actions agaisnt such practices.
Absolutely, hounhosp! It takes legitimate needs and turns it into a scam. Plus, the government provides 1 free credit report every year. It just takes advantage of people in need.
Personally I like the idea as you are probably right even hefty fines may deter some but what about justice against the wrong doers.
Hopefully if FTC and law enforcement really do their work as the Senate report promises, then there should be real jail terms.
There is no question some of these marketers and their clients knew exactly what they were doing, and breaking several laws into the bargain. Perhaps political expediency will not be an obstacle?
Unfortunately even hefty fines for such behavior is unlikely to be a real deterrent. You need to get the attention of the scam merchants.
Perhaps there could be a random drawing of perpetrators and jail terms could be awarded to the 'lucky winners'. Just create enough buzz around the notion that society does not want these marketing scams and perhaps the message will get through.
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Fatal System Error, the book just released by West-coast-based journalist Joseph Menn, is really a public policy statement written as a thriller for a wider reading public. UPDATED 2:45 PM
If you were a criminal looking to hide money-laundering operations, anonymously rent swaths of Web infrastructure for Internet badness, or create a financial base to threaten national security, where would you look? Panama? Liechtenstein? Offshore islands?
Most users have become accustomed to providing social-networking Websites with extensive personal details, information about friends, pictures, and connections. But new hacks out in the wild -- and already in the hands of the bad guys -- demonstrate that any thought of privacy or anonymity is a myth. Sites like Facebook, Bebo, LinkedIn, and Orkut are leaking personal information like an open faucet.
The open-source whistleblower site, Wikileaks, which according to The National has “produced more scoops in its short life than the Washington Post has in the past 30 years,” has temporarily and voluntarily suspended its own service.
Smarter Collaboration: How to Thrive in a Challenging Business Environment Market conditions are changing faster than ever, and organizations need to improve their agility and adaptability in order to provide better service and improve processes. The ability to work with customers, business partners, and employees as effectively as possible - while at the same time holding down costs - is a key to success. READ THIS eBOOK
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In the final episode of this series about the death of Internet anonymity, Saunders describes how the Internet of the future will start to attain a level of intelligence that requires no human intervention. Scary.
What can users today do to protect their online privacy? The simplest and most obvious option is to not use the Internet – at all. However, once all digital information is consolidated over the Internet, trying to protect digital identity by simply unplugging from the Internet becomes impossible – a fact that has manifest implications for civil liberties, Saunders says.
By 2011 the number of Internet-connected sensors will exceed 1 trillion, making your chances of doing anything or going anywhere unnoticed pretty much zero. Saunders talks about how the 'sensortization' of the Internet is eliminating the traditional divide between online and offline populations.
The 20th Century Internet was characterized by the ability to interact with other people and information on the Internet largely without anyone knowing who you were. The Internet of this century, conversely, will be defined by identity. Saunders explains how Internet users are unwittingly contributing to the demise of the anonymous Internet.
It is 20 years since the invention of the World Wide Web, and the Internet has changed beyond recognition since then. Steve Saunders peers into the future to predict what the Web will look like in another 20 years time – and he doesn’t like what he sees.
Data mining of social networks means people might face unforeseen consequences as a result of their seemingly innocuous personal choices and associations.
Microsoft reportedly has plans to integrate Windows Live and even Xbox with Windows Mobile. That may provide them a strategic advantage, but what will the cost be to your privacy? Tom explains all.
The release of Microsoft's newest OS raises the question of the company's relevance in an era when Google dominates applications and search, and Apple runs circles around Redmond with its gadgets and user interfaces.
Is there such a thing as complete anonymity on the Internet? It is something of a philosophical question, but the consensus among experts seems to be 'No.' However, there are degrees of anonymity, which might be more practical for most people – and more necessary than ever before.
Steve Saunders talks about the risks inherent in uncontrolled, widespread profiling of Internet users, and how one day this practice could form the basis of a new industry, the Outernet, which in economic terms will have outgrown the commercial value of the Internet itself.
Research shows that the youth of today like Facebook – but not blogging or Twitter. Does that mean Facebook has won, or just that it's not yet out of favor? Will all the services we see today fade into Ovaltine-or-Wheaties status in just a few years?
What kinds of companies are doing the most innovation in the data center? Turns out it's midtier enterprises that are taking the "Just Right" approach.
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