Progress

In March of 2007 we launched this site. Lillian Vernon now states in part:

"While we had a relationship with Webloyalty for many years, as of March 2007 we are no longer affiliated with Webloyalty."

Smarthome.com has also decided to stop these types of transactions. The representative I've talked to assured me that they in no way intended to trick people into this subscription service, however they don't feel comfortable continuing their relationship with WebLoyalty in the current way.

We continue to test other sites and its nice to see that many sites are now requiring the user to enter their credit card information when signing up instead of the behind-the-scenes transfer which prompted this site.

However- in light of this positive news there are still unanswered questions. Why did Visa ignore their own rules for so long. Why does the FTC think that "In general, the Commissions position has been one in favor of self regulation by the industry." is an acceptable answer. And does Mastercard even have a credit card fraud division?

Our mission continues...

FTC Response

My next logical step was to file a complaint with the FTC. According to the Who We Are page at www.FTC.gov:

The Federal Trade Commission is the nation's consumer protection agency. The FTC's Bureau of Consumer Protection works For The Consumer to prevent fraud, deception, and unfair business practices in the marketplace. The Bureau:

- Enhances consumer confidence by enforcing federal laws that protect consumers

- Empowers consumers with free information to help them exercise their rights and spot and avoid fraud and deception

- Wants to hear from consumers who want to get information or file a complaint about fraud or identity theft

However, in response to my complaint regarding WebLoyalty.com the FTC wrote in part:

"In general, the Commissions position has been one in favor of self regulation by the industry."

and

"As you can see, there are many federal laws and government agencies safeguarding consumer privacy. There are also many state laws that deal with these subjects. If you believe your privacy has been violated you should also check with your local law enforcement agencies to determine what actions you can take."

Lets just think about that for a while.

Multiple Layers of Security

Both my card issuer and Visa, USA agree- Its not their problem.

Visa, USA:

"While we at Visa are concerned about the satisfactory resolution of complaints regarding merchants, we do not have access to cardholder accounts or merchant records. As a result, we cannot contact merchants directly.

What we can do is suggest that you notify your Visa Issuer of any merchant practices that you feel are inappropriate."

Chase Bank:

"Please be advised that we do not have any means of taking
away LillianVernon.Com's privilege to accept Visa. If you
wish to file a complaint against this merchant, please
contact Visa directly at 1-800-847-2911."

Compare those statement with Visa, USA's homepage:

"Visa offers cardholders extensive protection through multiple layers of security, so you can feel confident and secure—no matter how you use your Visa card."

So Visa would love to help but sadly there is nothing they can do. Chase feels the same. Yet have no fear- you are protected by "multiple layers of security".

Fair Warning

Michelle Laird:

Please be advised that our tests indicate that SmartHome.com is breaking publicly available Mastercard merchant requirements by sharing personal credit card information with WebLoyalty.com/WLI*Reservation Rewards. Because of this, we at WebBetrayal.com have filed a formal merchant complaint with Mastercard, USA.

Obviously this is dissapointing. Not just because Smarthome.com has set itself as a leader in home improvement and home automation products- but because the first sentence of your Privacy page states:

"For more than 15 years, SMARTHOME™ has been committed to providing you with a high-quality shopping experience with respect for your security and privacy."

It further gives us concern that a subscriber to the Merchant Risk Council, which shows your commitment to online fraud, would give their customers' personal financial information to a third party.

If this is in error please let us know at your earliest convenience.

Michael R McNett

Visa Agrees.

I have contacted Visa about the information sharing that is taking place.

The customer service representatives agreed that the sharing of personal information which I described is against Visa's own policies regarding merchant accounts.

I have been told that Visa has assigned an investigator to the case whom will be calling me in the next few days.

It is my understanding from the conversation that Lillian Vernon.com will be the focal point of the investigation. It is also my understanding that I will be updated on the findings.

I will keep you informed.

Michael R. McNett

*It is important to note that this contact is with Visa and not one of their credit card processors or member banks.

The Reply

Dear Walter:

My comments about what I feel is WebLoyalty’s unscrupulous business model shouldn’t be a surprise. It appears that others are equally concerned:

1. McAfee SiteAdvisor gives WebLoyalty a caution symbol stating “Feedback from credible users reflected a negative overall experience after shopping at this site.”

2. The Boston Globe ran an article about WebLoyalty on September 12, 2006 titled “Suit says online marketer ran scam, Shoppers allegedly tricked into paying fee”

3. The Seattle Times Consumer Section ran an article about WebLoyalty on May 21st, 2006 titled simply “A Scam pops up”

4. Rip Off Report.com claimed they had received 4758 complains about WebLoyalty.

5. The Washington Post ran an article titled “Same Old Scam, Every Month”

6. I’m sure you are familiar with Adam Rosi-Kessel.org. Do you think some of the 1658 complains there might be hurting your reputation?

7. There are over 100 comments on ahoyhoy.org regarding your “scam”.

8. The Connecticut Better Business Bureau states that “this company has an unsatisfactory record… due to a pattern of complaints concerning deceptive marketing/selling practices and unauthorized charges to consumers’ credit cards.”

9. Consumer Affairs.com has an article from September 11, 2006 titled “WebLoyalty named in Federal Lawsuit, Consumers’ Credit Cards Charged Without their Knowledge, Suit Charges”.


It is not WebLoyalty’s reputation that needs protecting. It is Visa, Mastercard, and WebLoyalty’s affiliates who appear to be compromising their customer’s trust.

It is the Internet users assumption that credit card information given to Lillian Vernon will be protected. This gives the user the safety of not having to read every popup ad in detail on every site before simply clicking a button. In fact this assumption appears to be backed up by those publicly available policies by both Visa and Mastercard.





So it would appear that Internet users must not only assume that their information is safe with Lillian Vernon (and your other affiliates) but that Visa and MasterCard REQUIRE IT.

Furthermore, in regards to statements about wording, location, and your attachments:

1. Your email fails to mention the voice over stating:
“Congratulations- heres your special reward for your purchase today. Get ten dollars off your next purchase plus money saving discounts. Click yes below now.”

2. Because of the length of the page the user must scroll down to click yes. By scrolling down the user won’t be able to see the text supposedly granting you permission to their personal information. (Which, as stated above, a user can’t grant you anyways)

3. Entering an email address twice is common to ensure that an email address is correct. It in no way indicates some sort of electronic signature when the user clearly did not go to your site to make a transaction. Instead they were re-directed to your site via a pop-up.

4. From my tests it appears that the email address entered does not have to be valid nor does it have to match the email address used with the affiliate’s site. Please note that the two membership signups were tests. My family was originally deceived in November 2006.

5. The wording “authorizing the secure transfer of your name, address and credit or debit card information” is in smaller print then the “I want my Reservation Rewards discounts and my $10.00 Reward Certificate…” wording located directly under the “Yes (click here now)” button.

In closing- I urge WebLoyalty to change their business model to align with how the rest of the Internet does business. Failing to do so will not only hurt your affiliates- but your enablers: Visa, Mastercard, HackerSafe, etc.

Michael R. McNett

The Response

My post generated this response from WebLoyalty:

Dear Mr. McNett:

Webloyalty.com protects its reputation and monitors the blogosphere to insure information posted on our company is truthful and accurate. Through this monitoring, we found a blog entitled McNettblog.com with a posting, “The joke’s on us . . . all of us.” We have reason to believe that you are affiliated with this blog.

As you appear unhappy with our online subscription services, Reservation Rewards and Shopper Discounts & Rewards, Webloyalty.com has taken the liberty of cancelling your most recent membership in Reservation Rewards as of February 22.
For clarity, Webloyalty would like to provide you with background information on both of your memberships:

On January 25, 2007, when you completed your purchase on LillianVernon.com, you enrolled in Shoppers Discount & Rewards by clicking on a $10 cash back award, entering your email address twice and clicking “YES” on an enrollment button. We have attached the actual page that was on view the day and time that you joined. Please note that directly above the section for entering email addresses, the text advises that you are authorizing the secure transfer of your name, address and credit or debit card information to Shoppers Discount & Rewards for billing and benefit processing. You cancelled that membership on the same day.

On February 17, 2007, when you completed a separate purchase on LillianVernon.com, you enrolled in Reservation Rewards by clicking on a $10 cash back award, entering your email address twice and clicking “YES” on an enrollment button. Once again, we have attached the page on view at the day and time that you joined.

Webloyalty.com makes every effort to be straightforward with its offers, allowing consumers to make educated choices regarding the products and services they purchase. For this reason, we put the most significant details of its Shopper Discounts & Rewards and Reservation Rewards offer in a prominent location -- immediately next to the acceptance button (so that a consumer will have those details in front of him or her before joining the service). In addition, Webloyalty places those details on the very same page as the “YES!” button rather than requiring a consumer to click through one or more links in order to find these details.

Please feel free to update your blog site with this information.
Please contact me directly at or if you have suggestions for improving our service or to further discuss this matter.

Regards,
Walter Dabek
Director, Customer Service
Webloyalty.com

The jokes on us... All of us.

The below was posted on my personal site 02/16/2007

1. LillianVernon.com teams up with WebLoyalty.com to scam their customers into signing up for a worthless $10.00 per month membership.

They do this by giving your credit card information to a third party without your permission and what appears to be a conflict of their merchant bank agreements.

2. In other news... Visa and Mastercard respond to credit card fraud by creating the Payment Card Industry (PCI) Data Security Standard. A set of rules governing what steps merchants must take to protect account information.

3. In other news... ScanAlert.com was selected by Visa International to be the exclusive provider of Visa-branded PCI / AIS validation services in over 70 countries.

4. ScanAlert also provides a service to online retailers by which they "test" websites to make sure they are "Hacker Safe" and in their words: "...guard your information..." Retailers that sign up get to display the Hacker Safe logo.

5. So its a bit puzzling why ScanAlert.com allows LillianVernon.com to display the Hacker Safe logo.

I'm not making this up. LillianVernon.com gives out your credit card information knowingly to a third party without your permission which appears to be against Visa's own rules, yet the company in charge of PCI validation selected by Visa gives LillianVernon.com a thumbs up for guarding your information.