Bankruptcy

Visa Cuts One Sneaky Credit Card Trick

By Chris Kramer

In a recent press release, Visa announced that it will stop an online practice apparently dubbed a form of ?aggressive? abuse by members of Congress. This is good news for online shoppers. Here are the details.

• Data passing: Several credit card issuers have introduced what?s called a "data pass" feature to customers during online purchases. After paying for merchandise online, customers are prompted to visit another website and accept a temporary membership for some type of reward.
• Shared information: Once customers accept such offers, they?re directed away from the web site on which the original transaction was made. At the second site, they may need to opt into some sort of free trial membership or subscription?but they do not need to reenter credit card information.
• Unexpected charges: Though consumers themselves don?t give their information to these secondary sites, the credit card companies do (or did, in Visa?s case), and "free" trials quickly defaulted into costly monthly subscriptions or memberships. When customers began to see unfamiliar items on their bills, they apparently complained about the behavior.

Last fall, the Senate's Commerce Committee issued a report (see below) on these activities: it seems that the companies Affinion, Vertue and WebLoyalty sold $1.4 billion dollars in online memberships in such transactions and paid $792 million to the online retailers that participated.

While several online retailers apparently responded to initial complaints from Congress about the angry consumer complaints that began pouring in and canceled their participation, Visa is the first credit card company to announce a halt to the practice.

According to the press release, Visa's "priority is protecting our cardholders and the integrity of the electronic payments system. 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."

Sources indicate that "rewards" offers may still appear when you make online purchases, but you?ll have to reenter your credit card information for a transaction to go through.

Protect yourself: In general, when shopping online, be very careful if you navigate away from the page on which you made your initial transaction. That's when the danger of unwanted and unexpected purchases mounts.

Additional Resources

Aggressive Sales Tactics on the Internet and Their Impact on American Consumers

Full post as published by The Bankruptcy Blog on May 01, 2010 (boomark / email).