Four million consumers are enrolled in scam online discount clubs, and most of those four million don't even know that they're enrolled, according to an alarming recent testimony from West Virginia Senator John Rockefeller. Online club scams have made more than $1.4 billion dollars by signing up unwitting consumers, and they've charged more than 30 million Americans. Senator Rockefeller says that the Committee on Commerce has provided him with "a list of 88 well-known online businesses that have each made more than a million dollars through sharing their customers' credit card information with internet scammers." According to the New York Times' In Transit blog, these include Priceline, Expedia, Hotwire, Orbitz, Travelocity, US Airways, Buy.com, and Shutterfly.
How Does It Work?
You make an online purchase, and you're offered a special cash-back deal or savings after your order. The scam could be even more subtle than this, simply signing you up for a "discount club" with names like "Reservation Rewards" or even "Great Fun." Then, your credit card is charged without your active knowledge or consent.
How Do You Protect Yourself?
It's not in a company's interest to offer you money back after you’ve already made a purchase. So, if you are offered money or a discount after you’ve bought something, ask why.
Don’t Assume That Withholding Credit Info Will Protect You
You might feel safe because you didn't give away any credit card info, but other companies might pass along your info anyway. According to In Transit, customers were unwittingly funneled into discount club run by WebLoyalty, which received credit card numbers directly from Orbitz.
Check Your Credit Card Statement for Accidental Memberships
Many consumers don’t find out that they’ve “joined” a discount club until the charge appears on their statements. Recently, a discount club charged our friend's phone bill without her permission. Carefully read your credit card bills to make sure that no one is charging you without your knowledge and permission.
Compare the Benefits With the Costs.
Many discount cards are legitimate, but the question of whether it will be worth it for you. For instance, Barnes & Noble's longstanding discount club costs $25 per year; customers receive 10% off everything (even in the cafe), plus deeper discounts on hardcovers. So, unless you buy lots of hardcovers, you need to spend more than $250 per year at Barnes & Noble in order to break even.
Minda Zetlin is vice president of the American Society of Journalists and Authors, and co-author of The Geek Gap: Why Business and Technology Professionals Don’t Understand Each Other, And Why They Need Each Other to Survive.