Visa trying to protect consumers from third-party purchases…
In response to one of the biggest online scandals in years, Visa will no longer allow third party charges, like those from web merchants during checkout, to a cardholder’s account without the card owner reentering their account information. Using incentives to entice consumers, these third party marketing companies ask for email addresses in exchange for coupons and other deals after completing a sale. But many cardholders are unaware that they are actually signing up for a membership program with $10-$20 in monthly dues.
The change was initiated following last year’s investigation by the U.S. Senate Committee on Commerce after thousands of consumers complained about receiving mysterious credit card charges. The committee found that millions of consumers were misled, with the assistance of companies like Priceline, Orbitz and Continental Airlines, i.e., into signing on to so-called loyalty programs provided by three marketing firms, Webloyalty, Affinion and Vertrue. Consumer credit and debit card information was transferred to these firms, a process known as data pass, netting more than $1 billion in revenues.
Here’s how it worked: Consumers who visited one of the retail store’s websites saw an advertisement page while they completed their transaction. Assuming that the $10 cash or coupon being offered was an incentive reward for having patronized the business, shoppers entered their e-mail address and pushed a large ‘yes’ button. But deep in the fine print were the terms of the real deal. The consumer had actually joined a membership program and agreed to pay a monthly fee to one of the three marketing firms. Many cardholders were not aware they had signed up for these members. Some befuddled consumers were only made aware when their credit card statement reflected a monthly charge of up to $20.
Hoping to send a clear message, the new requirement by Visa will signal the cardholder that a second purchase is being intitiated and circumvent any attempt by companies using questionable marketing practices from scamming consumers. Cardholders will be asked to reenter their card information to accept an offer from a third-pary merchant, ensuring that they realize they are being charged for a second purchase. “Consumers who shop online using their Visa cards should be confident that they will only be charged for the products and services they legitimately intend to purchase, not those that are foisted on them through deceptive data pass schemes,” Martin Elliott, Visa’s senior business leader for U.S. payment system risks.
Many companies involved in the deception have severed ties with the third-party marketers.
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