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  1. #1
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Webloyalty / Reservation Rewards gets sued!
    There are companies that offer merchants a way to further monetize their customers by sharing purchase information. The merchants put code on their checkout pages that offers free shipping or a coupon or other suck "loyalty" crapola through another party, and in exchange, that other party gets to rape the consumer's information and do yucky stuff with it. It's been outed here of course, here's 2 examples:

    freeshipping.com:
    http://forum.abestweb.com/showthread.php?t=78391

    Reservation Rewards:
    http://forum.abestweb.com/showthread.php?t=45811
    http://forum.abestweb.com/showthread.php?t=45813

    Reservation Rewards operates under many other names and tells merchants how great their service is for the consumer because it builds loyalty (it doesn't) and simultaneously earns the merchant more money as well. It's the usual scumbag disguise for getting access to consumer info - merchants, don't fall for it!

    Need reasons to avoid it... here's a consumer that sued Webloyalty (aka Reservation Rewards) for alleged illegal transfer of consumer data at checkout through Fandango (movie tickets):
    http://www.internetretailer.com/dailyNews.asp?id=19866

    Once the consumer clicks on the "loyalty" offer, their credit card information is ported over to a third party, and in this case, they are signed up for monthly rebilling through Reservation Rewards. Consumers do not get the whole picture and are shocked when the bills start showing up on their credit card.

    "... a class action lawsuit that accuses them of engaging in a scheme in which Fandango customers were enrolled in Webloyalty’s Reservation Rewards program without their knowledge.

    The suit alleges that the customers’ credit card information was forwarded to Webloyalty during the checkout process when shoppers submitted their e-mail address to get a $10 gift voucher for their next Fandango purchases. Webloyalty allegedly began charging customers a $10 monthly fee for membership in the discount club. Fandango received a fee for each customer that signed up for the club, the suit charges"

    more...

    "The suit alleges violations of the Electronic Communications Privacy Act, unfair and deceptive acts and practices, unjust enrichment, invasion of privacy, and civil theft.

    The suit was filed by Fandango customer Joe W. Kuefler on behalf of a yet-to be-determined number of customers who were allegedly surreptitiously enrolled in Webloyalty programs after making purchases at various online retailers. It asks for damages of $10,000 or $100 a day for each day of violation for each plaintiff, plus treble damages"
    Last edited by Donuts; September 20th, 2006 at 09:32 AM. Reason: bolding

  2. #2
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    Somebody had the courage to sue them. Great.

  3. #3
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    More about the reservation rewards court case. Not resolved yet, but an interesting twist I noticed in this court case - here are the filed aliases involved in the case:

    Kuefler v. Webloyalty.com, Inc. et al
    Joseph L. Tauro, presiding
    Date filed: 09/11/2006
    Date of last filing: 03/22/2007

    Parties with aliases

    Fandango, Inc. dba Fandango.com
    (Defendant)

    Priceline.com, Inc. dba Priceline.com
    (Consolidated Defendant)

    Nelson Garrett dba Justflowers.com; dba Giftbasketsasap.com
    (Consolidated Defendant)

    Maxim O. Khokhlov dba Justflowers.com; dba Giftbasketsasap.com
    (Consolidated Defendant)

    ValueClick, Inc., dba 123inkjets.com
    (Consolidated Defendant)


    E-Babylon Inc. dba 123inkjets.com
    (Consolidated Defendant)

  4. #4
    http and a telephoto
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    wow.
    Deborah Carney
    TeamLoxly.com BookGoodies.com ABCsPlus.com

  5. #5
    ABW Ambassador Ron Bechdolt's Avatar
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    Very interesting!!!! Thanks for sharing that with us.
    Ron Bechdolt | Affiliate Program Management Consultant
    7 Days A Week Marketing

  6. #6
    OPM Queen Kristin Kinsey's Avatar
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    nm
    KK

  7. #7
    Internet Cowboy
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    It's just a matter of time before Batteries.com ends up on the list of defendants.

  8. #8
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    well, there's more to come, but it's not involving batteries.com at all.

    after G bought DoubleClick, there was rampant speculation that someone would rush in and buy ValueClick... and the ValueClick guys would get rich...

    but then comes....

    ftc questioning their lead generation tactics
    "Analysts have also raised concerns that that the Federal Trade Commission could investigate bad lead-generating practices in the market, or that related legislation could be on the horizon."
    http://news.moneycentral.msn.com/pro...503&ID=6721379

    discovering they're part of the webloyalty / reservation rewards suit...
    (above in post #3)
    http://forum.abestweb.com/showpost.p...85&postcount=3

    discovering they just got sued by an anti-spam group using washington state's tough laws to punish those who spam and those who facilitate it as well:
    http://forum.abestweb.com/showpost.p...9&postcount=19

    and...

  9. #9
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    and...

  10. #10
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    and.....2 more class actions.....

  11. #11
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    ding. you are correct sir. and when others here find out the details behind this breaking news, it'll be more than big enough to get it's own thread at ABW for sure. so i thought i'd show some restraint here... for now...

  12. #12
    ABW Ambassador MoneyBusiness's Avatar
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    so i thought i'd show some restraint here... for now...
    My vote is that you keep going - makes for some interesting reading.

    Also, I"m very curious as to what everyone thinks will happen to CJ in the coming months...

  13. #13
    Merchant & ABW Ambassador
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    wow..

    I thought Batteries dot com is cleaning up and moving away from this cos I saw a post like 2-3 months ago by the AM.

  14. #14
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    The court has not yet posted the full complaint online, but CJ / ValueClick has been served and that service has been recorded by the court as completed. Until the full original complaint is posted online, most here will just be speculating about what it might be about. I am very confident that once released, someone here will start a separate thread about it. Until then, you may access the court files as they are released and subsequently posted through PACER online (a paid service).

    This will be something that all of us continue to follow as it unfolds, unlike other past cases.

    There's no rush, this will be in front of us soon and will most certainly stay a while.
    Last edited by Haiko de Poel, Jr.; May 18th, 2007 at 01:29 PM. Reason: Per Request

  15. #15
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    And it will be yet another stain on the affiliate marketing industry as a whole. Thanks guys, we needed another layer of tarnish.

    And a special thanks to the stupid (yes I said stupid because many of them knew exactly what was going on but did it to make a buck) merchants out there who have enabled this activity by selling their customer info to these "nice folks".

  16. #16
    Life is Supposed to be Fun! Rexanne's Avatar
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    to quote Lox: "wow!"
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


  17. #17
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by UncleScooter
    And it will be yet another stain on the affiliate marketing industry as a whole. Thanks guys, we needed another layer of tarnish.

    And a special thanks to the stupid (yes I said stupid because many of them knew exactly what was going on but did it to make a buck) merchants out there who have enabled this activity by selling their customer info to these "nice folks".
    It's true that idiotic merchants, including batteries.com, were involved in the reservation rewards sellout, the lawsuit isn't aimed at batteries, but several other idiotic, unethical merchants AND ValueClick.

    This thread now shows a few related things - and the unifying factor is ValueClick / Commission Junction.

    ValueClick / CJ is being viewed by financial analysts as risky because the FTC is looking at those involved in incentive programs.

    ValueClick / CJ is a defendent in the Reservation Rewards scam suit.

    ValueClick / CJ is being sued for involvement in spamming (including allowing continued spam after required legal notice was given by the plaintiff).

    And the pending suits about to break in the news are also aimed squarely at VC / CJ.

    In my opinion, the biggest failure of most of these merchants involved is buying into VC / CJ being a trusted third-party. We've watched them promote nastyware (remember when todd told us weatherbug had been tested), facilitate spammers, enable sub-affiliate id networks to break the rules, created a special category of affiliate terms for those doing "special" stuff via bho's, promote esteemed partners like ebates, spread nasty screensavers and other parasites among many other things over the years. Merchants, for the most part, believe what CJ tells them and many think of affiliates as just noisy and complaining (even though their interests and ours are mutual and we seek to protect both). That view of them and us may change as the court system continues to reveal the facts of things.

    Trust is earned, not given. In light of these suits, I believe merchants will begin to question why they should trust those who claim to be trustworthy.

    As a public company, suits can be a huge impetus for real change. Court tags you for facilitating spam, behavior and compliance needs to change. Court tags you for reservation rewards scam, then no more of that. Court tags you for breach of contract with your affiliates, lots of behaviors need to change.

    Aside from suits, the FTC can redefine or clarify or enforces current rules on incentive marketing, and lots of changes come as well.

    My point is, we've reached that brink finally, where injured parties are sufficiently fed up to take legal and enforcement action. Between incentives investigations, reservation rewards scam, spam case and the one coming - we'll soon learn if change in our industry's biggest network is ever going to happen or not. The wild west was tamed similarly, and internet marketing is often compared to it. Will greed drive continued lawless-like behavior or will a degree of civility be imposed (and great prosperity follow!).

  18. #18
    Affiliate Manager cbsturg's Avatar
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    Quote Originally Posted by Donuts
    My point is, we've reached that brink finally, where injured parties are sufficiently fed up to take legal and enforcement action...The wild west was tamed similarly, and internet marketing is often compared to it. Will greed drive continued lawless-like behavior or will a degree of civility be imposed (and great prosperity follow!).
    I've always maintained that you can't make money long-term by screwing people over. Treating people right is the way to both happiness and financial success.

    This will be very interesting to watch unfold. Thanks for bringing it into the spotlight, Donuts.
    Chris Sturgill
    "All my life I've had one dream, to achieve my many goals." - H. Simpson

  19. #19
    OPM and Moderator Chuck Hamrick's Avatar
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    Two questions: will CJ/VC have pockets deep enough to tie this case up indefinately??

    And: I have always wondered why they didn't push their vertical to their merchants. Why we weren't inundated with offers to work with their CPA, media, shopping verticals.

  20. #20
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    Quote Originally Posted by Chuck Hamrick
    Two questions: will CJ/VC have pockets deep enough to tie this case up indefinately??
    Companies like to clear lawsuits, they leave uncertainty in the air. Especially in an atmosphere where a company can be sold. They could tie things up when the other party may run out of patience or money, but that's not the case here. The anti-spam guys (haselton) are well expereinced at taking spammers to court and trh biggie to come is a class action suit where lawyers will languish for a long time because their rewards are high (and rightfully so, protecting the masses is important).

    Quote Originally Posted by Chuck Hamrick
    And: I have always wondered why they didn't push their vertical to their merchants. Why we weren't inundated with offers to work with their CPA, media, shopping verticals.
    You're thinking like a marketer and wondering why they didn't come to you to try and help you sell more... they're busy already doing something else that's more profitable.

  21. #21
    OPM and Moderator Chuck Hamrick's Avatar
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    Do you think then that LMI was an attempt to better monetize the affiliate channel??

  22. #22
    Lite On The Do, Heavy On The Nuts Donuts's Avatar
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    nope, i think lmi was the beginning of their plan to use more data from their affiliate marketing arm so they could leverage that with their other channels.

    javascript links are inferior in practice for a few legitimate reasons and we all knew it, the backing motive was data collection that it would have enabled.

    they were willing to have us lose a fraction of our sales so they could gather data - and they were going to be able to garner much more information about the merchant's cart activity.

    while CJ is all about affiliate marketing, we must keep in mind that they are a small part of the larger ValueClick.

  23. #23
    OPM and Moderator Chuck Hamrick's Avatar
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    I think we lose sight of that fact because CJ is the biggest affiliate network. We tend to think that it is a big fish in a big pond. It would be interesting to know how much sales flows through the gates of CJ versus how much flows through the rest of the company??

  24. #24
    Defender of Truth, Justice and the Affiliate Way
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    Chuck,

    That information can be very insightful. Ever since VC bought CJ, that is now publicly available information through their SEC filings. I've followed that information on a regular basis when it became available. Lots of interesting and informative information to be had there.

    Just one example from I believe there Q4 report (which came out in Q1). They attributed CJ's growth in Q4 to the expansion in the European market. Little was mentioned at all about the US market. Another report, they had quite a bit to say about the move on Ebay's part on the impact it had on CJ's earnings.

    There is also always a quarterly earnings call that anyone can listen in on. You can usually find a transcript of it somewhere on the Net afterward. Duing the last one, last week I believe?, someone brought up the rumors of the FTC investigations in the Q&A. When all the LMI stuff was going on, that came up as well. They are usually interesting to listen to, despite all the accounting info being reported on.

  25. #25
    OPM and Moderator Chuck Hamrick's Avatar
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    Kellie would you mind posting a link to the share holders conference call. I listen to podcasts when doing rout chores and would love to listen in!!
    Last edited by Chuck Hamrick; May 11th, 2007 at 12:31 AM.

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