The Senate has passed legislation aimed at cracking down on deceptive online marketing practices that have led many consumers to unknowningly sign up for products and services they do not want or use.
The Senate on Tuesday passed the legislation, offered by Senate Commerce Chairman John (Jay) Rockefeller, D-W.Va., by voice vote, while also adopting a manager's amendment to the measure.
It emerged from a Commerce Committee investigation into aggressive online marketing tactics by three firms in particular, Affinion, Vertrue, and Webloyalty, that had partnered with some well-known online retail sites to enroll millions of consumers, many without their knowledge, in discount club memberships using tactics that netted more than $1 billion in revenues for these firms and their partners.
The committee found that many consumers were deceptively lured to sign up for services offered by these third-party firms with an offer for a discount or reward during the checkout process for an unrelated product or service. As part of their partnership with the online retail sites, the credit or debit card information was passed onto the third-party firms offering the club memberships who then often billed consumers monthly for services many say they did not use or seek.
Rockefeller's bill would prohibit companies from using misleading post-transaction advertisements and require them to clearly disclose the terms of their offers to consumers and obtain credit and debit card information directly from a consumer purchasing the service or product. It would bar online retailers and other websites from passing on consumers credit, debit or other billing information to third-party sellers like the three companies identified by the committee.
"This bipartisan legislation provides new standards that make sure businesses can't bill online shoppers for services they did not want to buy," Rockefeller said in a statement.
Similar legislation has been introduced in the House but has not seen any action.