Online merchant reward schemes... or "aggressive sales tactics"?
Those of you with eagle eyes and long memories may recall a story we published around a year ago, concerning a discount scheme operated by Shopper Discounts & Rewards, which is owned by Webloyalty.
We explained the scheme began when you reached the checkout page of several major internet merchants operating in the UK, including TheTrainline and easyJet. The sites would partner with Shopper Discounts & Rewards to offer an incentive such as cashback on your next purchase. Accepting the offer meant accepting the terms of Shopper Discounts & Rewards, in that the merchant shared your billing details with the scheme, which in turn signed you up to a monthly recurring membership, typically billed at £10 per month.
Our post, which then proceeded to call out Webloyalty for this practice, was published on Bitterwallet but taken down shortly afterwards. Webloyalty's legal team immediately lept into action. We had said a whole bunch of stuff they didn't like and linked to plenty of forums and newspaper articles - there are people who clearly weren't fans of Webloyalty. It's not often we comply with such notices - in fact this is the only time we have.
Why bring this up now? Michael Arrington over at Techcrunch is being far more vocal about Webloyalty and other companies, taking his cue from a report released by a U.S. Senate Committee called "Aggressive Sales Tactics on the Internet and their Impact on American Consumers". It states that Webloyalty is one of the three largest companies involved in this activity, and that together they have earned over $1.4 billion (around £833 million) in revenue from 35 million transactions, with 4 million people currently enrolled in the plans.
Below is a list of partner companies profiting from this "post-transaction marketing"; obviously it is dominated by American companies, but it gives you an idea of the popularity of such schemes:
How much has Webloyalty earned from its UK transactions? The US State Senate report concerns only US consumers so it doesn't comment. The report is certainly worth a read - it discusses various tactics employed to encourage sign-up, as well as details of Webloyalty settling a major lawsuit: