Sen. Klobuchar, Prof. Cox Offer Online Consumer Protection Advice
NOVEMBER 25, 2009—U.S. Senator Amy Klobuchar held a public-service press conference at the Law School yesterday to warn shoppers about deceptive online sales practices. She invited Professor Prentiss Cox, a nationally recognized expert on consumer protection against abusive marketing, to participate. Also present to tell his story was a recent victim of an online scam, Jim Sanderson of Minnetonka, Minn.
The practice they discussed, sometimes called "post-transaction marketing," involves selling club memberships or other unwanted services to online shoppers without their full knowledge and consent. An estimated 95% of club members don't know they have purchased a membership, never receive any benefits, and cancel once they discover the charges, Cox said.
Online shoppers are often in a rush to get through checkout, and "that's what these scam artists count on," Senator Klobuchar said. Clicking on a free offer or discount button is often the easiest way to conclude a purchase and get off some sites. That is what sets in motion the forwarding of credit card information to a marketing company, which begins charging for a club membership.
Don't click on any offer or "free trial" buttons without reading the small print, Klobuchar warned. Also, review your credit card bill as soon as you get it, keep in mind the difference in liability for unauthorized expenses with credit cards versus debit cards, and consider buying from local businesses.
Mr. Sanderson recently concluded such a club membership that he unintentionally began months ago while purchasing tickets with a credit card. The $10 monthly charge raised no flags at first, since he frequently travels and charges his airline, hotel, and meal costs. When he did discover and question the charge, canceling was somewhat more complex than joining the club. He said that in sharing his experience with colleagues, he discovered many similar stories.
Senator Klobuchar, a former Hennepin County Attorney, serves on a Senate Commerce Committee that has been investigating fraudulent and aggressive marketing schemes. Professor Cox, former head of consumer protection with the Minnesota Attorney General's Office, testified as an expert witness before the Committee last week.
The problem, Cox said, is part of a larger problem allowing large financial institutions and retailers to sell access to consumers' accounts to direct marketers. Technically, the membership is fully disclosed if people read the small print on the site, but the fact that almost no one charged for these membership clubs is aware of the charge and wants the club membership proves that this practice is deceptive.
The press conference was scheduled to precede "Black Friday," the day after Thanksgiving, which traditionally kicks off holiday shopping and is typically the heaviest retail shopping day of the year. So many people are now shopping online that the Monday after Thanksgiving also has been given a name, Klobuchar said: Cyber Monday.
For shoppers having trouble closing down a session and getting off a Web site, Mr. Sanderson offered a tip from his field, the software industry. "Turn off the computer and reboot."
More information on the Nov. 17 Senate hearing is available on the Web site of the U.S. Senate Committee on Commerce, Science and Transportation.