Click to enlarge

A recently released Senate Commerce Committee staff report is taking aim at the dark side of 'aggressive' online direct marketing, and has singled out shady and controversial practices by three companies - Affinion, Vertru and Webloyalty, in addition to the hundreds of retailers that have used their services.

The report details purchase procedures in which consumers rarely realize they are signing up for a monthly club membership while buying seemingly unrelated products, such as movie tickets, plane tickets, or flowers. This is because the additional purchase is couched in deceptive offers for coupons or savings and does not always require th consumer to re-enter credit card information, the Commerce Committee said.

450 Retailers

There are about 450 retailers that have used the three companies' services, including household names such as 1-800 Flowers, AirTran Holdings,  Avon.com, Classmates.com, Continental Airlines, FTD, Fandango, Hotwire, Intelius, Movietickets.com, Orbitz, Pizza Hut, Priceline.com; Restaurants.com, Shutterfly and US Airways, according to the report.

All together, 88 e-retailers have made more than $1 million through partnering with Affinion, Vertrue, and Webloyalty, and 19 others have made more than $10 million.

Not surprisingly, the companies in question all say that - since the launch of the investigation - they have put in place new policies that include getting consumers' express consent for the purchase.

Eroding Trust

Although some of the participating retailers have defended such practices and relationships, there is ample evidence consumers become irate after unwittingly purchasing an unwanted club membership. In general, such practices erode trust in e-commerce - even though outright fraud online is declining.

According to a survey from payment management solutions provider CyberSource, projected 2009 fraud losses to US and Canadian online retailers are expected to be $3.3 billion, a 17.5% decline from $4 billion in 2008 fraud losses, writes RetailerDaily. This is the first drop in estimated e-commerce fraud losses since 2003.