Senate investigates misleading online marketing tactics

Sen. Jay Rockefeller (D-W.Va.), Chairman of the Senate Commerce Committee, released an investigative report today showing that three direct-marketing companies, as well as the e-commerce sites that partner with them, have been using "highly aggressive sales tactics" to charge consumers for services they do not understand or want.

The report was released hours before the committee is scheduled to hold a hearing on the issue. Hillicon Valley will be bringing you live updates from that hearing.

"After six months, this Committee has found that the companies we are investigating have figured out very clever ways to manipulate consumers' buying habits so they can make a quick buck," Rockefeller said. "Millions of Americans are getting hit with these mystery charges every month--we have to do all we can to protect the hard working families relying on us to look out for their wallets and well-being."

Rockefeller has been investigating these marketing practices since May. Earlier this month, he sent letters to 16 e-commerce sites including Priceline.com and Orbitz.com, who appear to partner with the marketing firms in question--Affinion, Vertrue and Webloyalty--and share consumers' information after online purchases are made.

The report says:

"With the cooperation of their online 'partners,' the three companies insert their sales offers into the 'post-transaction' phase of an online purchase, after consumers have made a purchase but before they have completed the sale confirmation process...Misleading 'Yes' and 'Continue' buttons cause consumers to reasonably think they are completing the original transaction, rather than entering into a new, ongoing financial relationship with a membership club operated by Affininion, Vertrue or Webloyalty."

Affinion senior vice president James Hart said in a statement that the company is "continuously reviewing and updating those industry-best standards to ensure that our customers are always making fully informed decisions."

Last week, Affinion announced new marketing guidelines for readable billing language and clear consent from consumers.

Beth Kitchener of Webloyalty said the practices described in the report "are no longer the way we do business." She said the company made significant changes in August and now requires consumer consent relating to billing.

"We will continue to work with the Committee and others on ways to improve industry practices to provide assurance that consumers are affirmatively choosing to join our programs," she said.

The Today Show ran a segment this morning.