Buyers on eBay and Half.com were among those exposed to companies that are now under investigation by a United States Senate committee for exploiting consumers' expectations about online shopping to trick them into joining their membership clubs.

According to the Senate report, Affinion, Vertrue, and Webloyalty and their ecommerce partners earned over $1.4 billion in revenue with their "misleading" tactics. The report includes Half.com and eBay vendors and sellers as companies that partnered with these firms, including ChannelAdvisor, Buy.com and Tiger Direct. Vendio also participated in the Webloyalty program as recently as July.

While consumer complaints were rampant over such programs (WebLoyalty was the target of a class-action lawsuit filed in Massachusetts in 2006), the compensation for participating in such programs was apparently too good to pass up, for some. For example, the Vendio terms inform sellers if they participate in the Web Loyalty program, they become eligible for a credit to their Vendio account for $10 for every 100 completed checkouts.

In 2006, AuctionBytes reported that Marketworks had "opted in" eBay sellers into using WebLoyalty on its third-party checkout that eBay buyers and consumers used to complete transactions. At the time, we reached out to one of eBay's biggest sellers, Adam Hersh, to find out why he offered WebLoyalty to his buyers through the Marketworks program.

Mr. Hersh said that he had received only one complaint in 2-3 years out of over 100,000 transactions, and said he earned 10 cents on each transaction when buyers go through the checkout process. He did not respond to our email inquiry on Wednesday.

We asked eBay on Wednesday if it was aware of third-party vendors' use of the WebLoyalty program on third-party checkout for eBay transactions, and whether it took any action to prevent this from happening or continues to this day. We also asked about Half.com being named in the Senate report. eBay did not respond by press time.

AuctionBytes also reached out to numerous eBay vendors to find out what they thought of such programs and whether they participated - see table below.

After our story ran in 2006, there was a class action lawsuit filed in US District Court in Massachusetts accusing Webloyalty.com of engaging in a "coupon click fraud" scam, a lawsuit that it ultimately settled.

Eric Best, CEO of Mercent, said his company has never participated in such programs, but said retailers might be impressed by demonstrations that turn out to be less appealing in practice. He said implementation of such programs most likely varied among retailers, and guessed that some of the participating retailers ensured consumer transparency.

According to the Senate committee investigation, "Almost no one receives the "cash back award" that Affinion, Vertrue, and Webloyalty offer to online consumers at the time of enrollment."

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Vendor	Participated?	Company Comment
Auctiva	No	Jeff Schlicht, CEO of Auctiva: These scammy offers were bad for buyers, bad for sellers, and bad for eBay. They were tricky, unethical, and I wanted no part of them with Auctiva.
ChannelAdvisor	Yes	Company Statement: Our core objective as a company is to offer retailers a great platform for increasing revenue, profitability and efficiency in their e-commerce efforts. As part of that, we offer our customers a network of partnerships that retailers can leverage for everything from back-office accounting to shipping to customer management tools. Included in this network of partnerships is WebLoyalty, which allows retailers to monetize consumer traffic through a subscription rewards program. It is purely the option of our customers to choose, on an individual basis, which of these partners they work with, including WebLoyalty. We are continuously evaluating our partner network to ensure that each partner is providing sufficient value to our customers, and that includes factors like regulatory compliance and preserving a positive consumer experience. If at some point we conclude that any specific partner, including WebLoyalty, is not providing sufficient value to our customers and their respective consumers, we will no longer include them as a member of our partner network.
eBay's Half.com	Yes	No comment by press time.
Infopia	No	Coleman Barney, CEO of Infopia, Inc.: We haven't used Affinion, WebLoyalty or Vertrue or any other "loyalty" type of offering. These and other types of aggressive sales practices like pop-up advertising or navigation blockers that don't allow a customer to navigate freely are a nuisance. We only offer value-adding services like PowerReviews for customer reviews and Nextopia for advanced search. While WebLoyalty approached us a year or so ago with an attractive way for us to potentially share in revenue we didn't go with it because it involved offering something that we don't think reflects well on our customers. Our goal is to offer third party services that increase conversion or build traffic. We don't offer services designed to bring revenue to us at the expense of irritating online consumers.
Kyozou	No	Larry Velman, GM of Kyozou Inc. These services have been known to cleverly manipulate trusting internet shoppers into subscribing to unwanted discount schemes, and then gently and legally relieving them of small but recurring monthly charges on their credit card bills. Kyozou firmly condemns these underhanded practices of deceiving credit card holders and does not offer such services to its online merchants. We hope the Senate Commerce Committee recognizes these practices as unlawful and helps to restore the trust that has been lost in online shopping.
Mercent	No	Eric Best, CEO of Mercent : Consumer credit card data will always be at risk to some degree - whether it be in the real or virtual spending environment. Credit card companies have to increasingly do more to protect consumers as predatory companies think of new and creative ways to capitalize on vulnerable consumers. There will always be value-added services that benefit consumers - up sells happen all the time and they should. Companies should be incented to innovate and develop new consumer products and services and motivated to put those products and services in front of the customer - this is capitalism. When things cross the line is when companies knowingly trick consumers into buying products and services rather than selling products and services based on the products' own merit and value. Legislation should not interfere or prevent retail innovation, creativity and the like. What legislation should prevent are situations where products and services are being sold and bought by consumers through deception. Businesses need to take ownership and operate with ethical business practices in support of the consumer.
Vendio	Yes	No comment by press time.

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