Yahoo Among Profiters From Senate Investigated $1.4 Billion 'Web Scam'

The U.S. Senate Committee on Commerce, Science and Transportation are investigating loyalty programs from companies including Vertrue, Webloyalty, and Affinion that generated $1.4 billion with credit card information given to them by their marketing partners - which include Yahoo - without the knowledge of most of the customers, Cnet reported.

"The government says the investigation shows that Webloyalty, Affinion, and Vertrue "trick" consumers into entering their e-mail address just before they complete purchases at sites such as Orbitz, Priceline.com, Buy.com, 1-800 Flowers, Continental Airlines, Fandango, and Classmates.com. A Web ad, which many consumers say appears to be from the retailer, offers them cash back or coupon if they key in their e-mail address," Cnet stated.

Since no credit card information is asked for by these promotions. customers took advantage of reduced prices from "trusted" vendors and had to read the small type - which virtually no one does - to discover they would be charged monthly by the program - between $9 and $12.

Yahoo is amongst the companies that received between $1-10 million through the arrangement, according to government figures.

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About the author

Frank Watson has been involved with the Web since it started. For the past five years, he headed SEM for FXCM -- at one time one of the top 25 spenders with AdWords. He has worked with most of the major analytics companies and pioneered the ability to tie online marketing with offline conversion.

He has now started his own marketing agency, Kangamurra Media. This new venture will keep him busy when he is not editing the Search Engine Watch forums, blogging at a number of authoritative sites, and developing some interesting online community sites.

He was one of the first 100 AdWords Professionals, a Yahoo and Overture Ambassador, and a member or mod of many of the industry forums. He is also on the Click Quality Council and has worked hard to diminish click fraud.