CBS 5 Investigates With Anna Werner

(CBS 5) Some Bay Area residents are asking how they were signed up and charged for an Internet service they say they didn't want.

Glen Marcus' story of the strange credit card charges starts two years ago with talking paper bags.  You may have seen them: bags dressed up as characters used in ads from online movie ticket web site Fandango.com.

Marcus says the colorful ads with the bags lured him to Fandango, where he now buys movie tickets.

"It's very convenient," said Marcus, a Silicon Valley engineer.

Like other online shoppers, Marcus purchased the tickets with his credit card and says during the transaction, he even got an offer for money off his next purchase.

But he says a few months later, Marcus noticed something odd on his credit card bill.

"I noticed this weird little charge on my credit card," he said.  And not just for one month.

"I look back a couple of months and sure enough, there's nine dollars, nine dollars," he said.

The charges were for something called "WLI Reservation Rewards", a service Marcus says he was unfamiliar with and didn't remember having purchased.

He's not the only one.  CBS 5 Investigates found reports of thousands of online shoppers complaining about the same small monthly charges from "WLI Reservation Rewards" on their credit cards, after they made purchases from well-known websites including Priceline.com, Hotels.com, Justflowers.com, Petco.com, Classmates.com and others.

CBS 5 Investigates ordered tickets on Fandango.com to see what would happen.  After entering the required credit card information to buy movie tickets, we clicked a web "button" marked "Continue" on the Fandango site.

That's when we heard a female voice say, "Congratulations!  here's your special reward for your movie ticket purchased today…"

It looked as if Fandango was giving us a free movie coupon. All we had to do was enter our e-mail address twice and click a web button marked "Yes".

But CBS 5 Investigates discovered we weren't clicking "Yes" to Fandango.  In fact, by saying "Yes", we had just become the newest member of a discount buyers club run by a company called Webloyalty Incorporated, or WLI.
 
Sue Petersen, a senior service manager for Oracle, said she got hit when she bought clothing online from Lane Bryant.  She says it was nearly a year before she noticed a hundred dollars' worth of charges from Webloyalty.

"I was a little shocked.  I was like, Wow!  I'm paying almost ten bucks a month for this.  I don't know what it is and don't care," Petersen said.
 
And she had no idea how Webloyalty had been able to charge the fees to her credit card, because she says she never gave the company her credit card information.

It turns out, when shoppers click "Yes" to what they might think is a free offer, they're actually giving permission for the website they're visiting to transfer their confidential credit card information to Webloyalty.  We relayed that information to Petersen.

"Wow, that's amazing," she said. "Why isn't that illegal?"
 
It's a question we asked Webloyalty CEO and co-founder Rick Fernandez.

"We abide by laws in all 50 states", he told us.

So why does Fernandez think so many people are complaining about Webloyalty?

"We're not happy that we get these complaints," he said.  "But we try to do the best we can to make our offer clear."

Fernandez says Webloyalty takes several steps to make its offer absolutely clear.  For instance, the sign-up page has several paragraphs in small print that Fernandez says detail the charges shoppers can expect to pay after they join. 

And he says those disclosures are backed up by e-mail notices sent to new members.
 
But an Internet expert interviewed by CBS 5 Investigates disagrees. 

"What I can guarantee you is that this is the type of stuff that people don't tend to read," says Jakob Nielsen, one of the world's foremost experts on what's called "Internet usability" -- simply put, how people use the web.

Nielsen says those pages include a lot of what he calls "verbiage". 
       
We asked him to analyze Webloyalty's sign-up page.  He says the impression left by the page is of a free offer.

He says the perception of viewers would be that "(They're) not paying for something on this page. The perception is, (they're) going to get a free movie ticket."

One reason for confusion, he says, is that on most web sites shoppers are required to enter account information, such as a credit card number and expiration date, when they're purchasing a product or service.  But on the Webloyalty sign-up pages CBS 5 and Nielsen viewed, there was no opportunity to enter a customer's account number--because when they click "Yes", their credit card information is automatically transferred from the website they're on to Webloyalty.

"I don't think that anybody would expect to be charged.  Because it's been very clearly stated that it's a free movie ticket that you're getting.  It does not make it clear," Nielsen said.  "Therefore, you are deceiving your potential customers."

"I disagree with him," said Webloyalty's Fernandez.  "We have experts to make sure that our e-mails and our marketing is as clear as it can be."

So we asked him why Webloyalty doesn't simply require people to enter their credit card number. 

"We're trying to make this process as simple and clear as possible for the consumer," Fernandez said.

But Nielsen says if that's true, Webloyalty isn't doing a very good job.

"It could either be completely incompetent," Nielsen said.  "Or it could be, knowing what people look for and deliberately doing the opposite."

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