I'm a cheerful pessimist about human nature, I generally expect the worst but don't let it get me down. This report from the US Senate is beyond the pale though, it really makes me mad. It details how companies like Affinion, Webloyalty and Vertrue pay immense amounts of money (CPM rates of up to $2650!) to well-known firms like priceline.com and 1-800-flowers to get links inserted into their checkout process. These links look like discount offers, but clicking on them passes your credit card information to the scammers, and lets them set up a recurring monthly payment on your account without asking for permission, hoping you won't notice, at least for a while.
How much money is there to be made here? The report estimates just those three firms have earned over $1.4 billion so far! And how much of a scam is it? Vertrue estimates 98% of their call volume is cancellation requests, and Webloyalty admit that 90% of their members have no idea they're enrolled.
As an entrepreneur I know how much over-regulation can hurt startups and economic growth, but scams like these drive people down that path. As an industry we need to have enough sense to avoid crazily short-sighted schemes like these if we want to have a long-term future. All three companies are owned by big-name private equity firms, and big-name websites are hosting their ads. Everyone involved should be ashamed of themselves, and nobody else should touch them with a barge pole. Sadly, $1.4 billion is very persuasive…
Pete Warden's blog 