Webloyalty Members May Be Due for Some Payback
We just received an e-mail from a reader asking us if an e-mail he'd received informing him that he may benefit from a proposed class-action settlement against Webloyalty.com was for real. WebWatch has a long history with Webloyalty, and we were pleased to inform him that the e-mail was indeed legitimate.
According to the e-mail, he may be eligible to receive compensation since he was a member of/or enrolled in one of Webloyalty's programs from September 11, 2000 through September 30, 2008. Those programs include Reservation Rewards, Shoppers Discounts & Rewards, Members Specials, Buyer Assurance, Distinctive Privileges, PC Protection Plus, Travel Values, Travel Values Plus, Classmates Rewards and Wallet Shield.
The e-mail goes on to state that class members who submit a valid claim form can receive a cash settlement payment in an amount equivalent to the cost of up to two months' membership in each program for which they were enrolled, and that the defendants have agreed to pay a settlement up to $10 million dollars. Besides Webloyalty, the defendants include Fandango.com, Priceline.com, Inc., Justflowers.com, Giftbasketsasap.com, ValueClick, Inc., E-Babylon, Inc., Kraft Foods Global, Inc. and Gevalia.com.
WebWatch first wrote about Webloyalty in 2005, when we commissioned a consumer investigation to look into some questionable business practices by one its discount clubs, Reservation Rewards.
As we reported, Webloyalty made its money from customers who paid monthly fees for consumer discount clubs it operated. Consumers enrolled in these clubs by filling out an online rebate form on partner sites (i.e. the defendants), which automatically triggered the transfer of personal credit card data from the partner sites to Webloyalty, making them paid subscribers of Webloyalty's services as well. Most—if not all—consumers never realized what they were signing up for until they started noticing recurring charges on their credit card bills.
The lawsuit echoes WebWatch’s findings, noting “the Defendants enrolled consumers in the Programs listed above in the course of online retail transactions without obtaining sufficient authorization or consent, and thereafter wrongly charged fees for membership benefits.“
When the article was published in 2005, Webloyalty was already the source of numerous complaints from consumers, so many that the Better Business Bureau gave it an “unsatisfactory” rating. The WebWatch article generated a lot of attention as well—obviously too much, since we discovered Webloyalty hired a marketing firm to try and push the article down in the search rankings when someone Googled "webloyalty." You can see how well that worked here.
We also posted a follow-up in response to a comment from a reader of a related article by our good friend Bob Sullivan at MSNBC, who wrote about the phenomenon of “online reputation management” firms like the one Webloyalty hired to eliminate negative press from search engine results.
The last time we heard of Webloyalty was in November 2007, when WebWatch was subpoenaed by the law firm that brought the class action suit to provide copies of consumer complaints against Webloyalty in the event the parties were unable to reach a settlement.
No surprisingly, the defendants deny any wrongdoing and make no admission of liability by agreeing to the proposed settlement, which they say will preclude protracted and expensive litigation. You can read the full notice here, and visit the settlement site here.