Senate Panel Blasts E-Commerce 'Scams' - Page 2

Page 2 of 2: Preying on the good faith of consumers

The problem, as he sees it, is that the practice preys on the good faith of consumers, who often assume that the pop-up is an offer from the trusted e-commerce company, and don't realize that they're enrolling in a fee-based club.

The firms say they offer coupons and other deals in exchange for the membership fees, though many consumers said they didn't receive any communication alerting them they were enrolled in the clubs.

"Most consumers don't realize they have been scammed until months later when they realize the club has been charging their credit card," Rockefeller said.

No representatives from industry were on hand to defend themselves at today's hearing. A spokeswoman for Rockefeller told InternetNews.com that the committee is planning a separate hearing where executives from the companies will be called to testify. The committee has not set a date for that proceeding.

Instead, Rockefeller assembled three business and law professors to rail against the post-transaction marketing practice, and two consumers who fell victim to the scams and made for very sympathetic witnesses. One was a disabled veteran of the wars in Iraq and Afghanistan who had suffered a brain injury in combat and been awarded the Purple Heart. The other was a woman from Minnesota whose daughter had become a quadriplegic after a skiing accident.

"It's shocking that they can basically sell my credit card information to an unknown company," the woman, Linda Lindquist, told the outraged senators.

Several e-commerce companies have said they plan to sever ties with the membership club promoters in the face of the inquiry.

Authorized to share personal information?

The practice of sharing data has survived legal challenges in the past because courts have found that by clicking through the pop-up window, a user is affirming consent to enroll in the program. Meanwhile, the e-commerce companies are covered by stipulations in their privacy policies that explain they will only share their customers' personal information with outside vendors with their permission, which is implied by the act of clicking to accept the pop-up offer.

"The existence of disclosure does cause some confusion in the courts," said Prentiss Cox, a professor at the University of Minnesota Law School.

Cox, a former staffer at the office of the Minnesota attorney general, said he has been fighting the practice of post-transaction marketing for a decade.

"This is one of those rare cases where there is a clear and obvious answer," he said. "Financial institutions and retailers shouldn't sell account numbers and access to accounts to third parties, period."