NORWALK Seymour resident Maria Simpson bought a book online and also became a member of a shoppers discount club. Problem is, while she wanted the book, she didn't want to be in the club and didn't find out about her membership until months later. "I ordered a book in Barnes Noble and a couple months later I see this $10 charge," Simpson said.
She said she saw a pop-up advertisement to get $10 back on her next purchase, so she clicked on it thinking it was a Barnes Noble offer. But it was from Norwalk-based Webloyalty.com, a discount shopping club that charges people a monthly fee for membership.
It sounds like a familiar story, and it's one that's drawn the interest of Attorney General Richard Blumenthal, as customers report being signed up without their knowledge by being baited to join something with an offer of a payment or discount. "We are constantly trying to look at ways to make it clear," Fernandes said Tuesday of the offer Simpson and others said tricked her. The company has added multiple statements to the ads, and tells people this will sign them up for a free-trial membership and then they will automatically be billed the monthly fee of $10.
During the trial period, new members are sent five e-mails telling them what is going on, he said. He
If people do have a complaint while dealing with Webloyalty call center staff or supervisors, they should contact him or other executives via their e-mails listed on the company Web site. Despite these efforts, Webloyalty is facing a lawsuit in U.S.
District Court in Massachusetts and Blumenthal said he is investigating complaints against the company. Fernandes said the suit is without merit and Webloyalty is seeking a summary judgment to dismiss it. The law firm representing the plaintiff did not return a request for comment.
Fandango.com is also named in the suit, which says Joe Kuefler was unwittingly duped into signing up for Webloyalty's Reservation Rewards program while buying movie tickets from that company. Webloyalty has agreements with some companies that allow the Norwalk business to post pop-up ads on their sites that offer a trial membership in exchange for a discount or payment.
After the trial period, Webloyalty charges the customer's credit card or bank account the $10 fee on a monthly basis. The company that allows Webloyalty to post the ad gets a portion of the fee. The payment can range from 50 cents to $2 per transaction, according to the company's Web site.
Webloyalty said it had revenues of more than $108 million in 2005 and employs more than 300 people in Norwalk and Shelton. Other shopping clubs that have garnered many more complaints than Webloyalty only bill once a year, and the number of complaints against Webloyalty is a lot less than the other clubs. Blumenthal said since 2004, there have been 38 complaints against the company.
He added that Webloyalty has so far returned fees to customers. The majority of customers are satisfied with Webloyalty, Fernandes said, and some "have saved thousands." Webloyalty offers several clubs including ones that give discounts for retailers, restaurants and hotels.
Fernandes said the businesses that sign up with his company give his members discounts because he steers those members to their stores and services. The retailers use the money they save on advertisements to give the discounts, he said. Despite the efforts by Webloyalty, it is still getting complaints from customers that they didn't know they were members until they saw the charge on their bills, begging the question of whether people are using the service.
With fewer than half the people who sign up for the free service actually using it, the question may be whether the service is worth the price. Fernandes said it is and explained the company is able to get discounts from many online retailers. He said those retailers give Webloyalty members the discount, because Webloyalty steers business to the retailer.
It's like a substitute for advertisement, Fernandes said, and that allows the retailers to offer discounts of 2 to 20 percent. "The benefit is certainly open to question," Blumenthal said. But that's for the individual consumer to decide, he added.
Fernandes said Webloyalty offers deals on dining out, where a person can get two $15 entrees for the price of one, which means if that member ate out once a month with his or her spouse, the couple would actually be saving money compared to eating out without the membership. Simpson seems less than convinced. She ultimately concluded that she just wants to have people be aware that they could be joining a club if they click on a pop-up ad and enter their e-mail address.
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