A Virginia girl who went online to buy her mother a present claims in a federal class action suit that she was defrauded by Shopper Discounts, a subsidiary of Webloyalty, in a “coupon click fraud” negative option scam.

The suit charges that Danielle Stryker of Winchester, Va., who was 15 years old at the time, wound up inadvertently signing up for a “membership” that cost her $12 a month, even though she did not intend to sign up for it, had no use for it and never used it.

Danielle's suit charge that the business practice at issue is “as simple as it is deceptive and devious” and is used on a wide network of Web sites that subscribe to Webloyalty's e-commerce services.

In Danielle's case, she was on the Woman Within site looking for a gift for her mom when a pop-up offered her a $10 discount on her next purchase. When Danielle filled out the form, her credit card number and other information were transferred to Shopper Discounts, which began charging her $12 a month, supposedly as part of a 30-day trial.

No disclosure of the fee and membership terms is made prior to the transaction, the suit charges. Webloyalty later sends the customer an email informing them that they have 30 days to cancel their membership or they will be charged $12 per month indefinitely. The supposed discount program, in fact, provides no benefits whatsoever, the suit alleges.

The notification email is purposely designed to resemble spam and is unlikely to be read or even seen by the majority of the customers victimized by the scheme, the suit charges.

Stryker said she did not discover the charge on her debit card until $168 had been taken from her account. The suit says Webloyalty failed to refund the payments, even after being informed via an affidavit that Stryker was a minor and thus unable to enter into a legally-binding agreement.

Many complaints 

The lawsuit alleges that “hundreds of thousands” of consumers have complained to Webloyalty and to local, state and federal agencies about the program, which is marketed under the name “Reservation Rewards” and recounts previous class actions, suits by the attorneys general of New York and Connecticut and even a U.S. Senate hearing, but says the negative option practices continue to victimize customers.

The actions amount to a violation of the Electronic Communications Privacy Act and also constitute unfair and deceptive acts, unjust enrichment, invasion of privacy, obtaining money by false pretenses and computer fraud.

The suit alleges that as a result of its practice of “charging customers $12 for nothing,” Webloyalty generated revenue of more than $100 million in 2006 and has since expanded on that amount by acquiring new affiliates.

Webloyalty is based in Norwalk, CT. Woman Within is owned by Redcats, a New York company that also owns such well-known businesses as Roamans, Jessica London, Brylane Home and Avenue.

 

Learn more about negative options.