Webloyalty, Fandango file motion to toss class-action lawsuit

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Webloyalty.com Inc. and Fandango Inc. have jointly filed a motion for summary judgment pertaining to a class-action lawsuit brought against the companies claiming Webloyalty's Reservations Rewards program was deceptive.

In the motion, filed with the United States District Court in Massachusetts on Nov. 13, Webloyalty and Los Angeles-based Fandango, deny that the program is in any way deceptive, fraudulent, or misleading or that customers are not fully informed of the terms and substantial benefits of the program before joining.

"This is the first time in eight years of business that anything like this has happened to us," said Rick Fernandes, CEO and co-founder of Webloyalty, Norwalk, CT.

"We try to have a high level of customer service, and I think we succeed," he said. "The fact is that this lawsuit misrepresents totally the way our business works. That's why we filed this motion of summary judgment. This is not an accurate representation of what we do."

The companies also said customers are fully and accurately informed of the method by which they can elect to join the program, and that customers affirmatively and voluntarily consent to joining the program and to the use of their credit or debit card information.

The complaint, filed in the U.S. District Court in Massachusetts on Sept. 11, charges that consumers who purchase movie tickets from Fandango.com are presented with a "pop-up" advertisement upon completion of the transaction, offering the consumer $10 off the next purchase. Three additional copycat class-action lawsuits have also been filed.

However, the suit claims, unbeknownst to the consumer, once the consumer enters his or her e-mail address to redeem the coupon, Fandango transfers the consumer's private credit card information to Webloyalty, which begins charging a monthly fee (up to $10) for membership in its Reservation Rewards program. This shows up on the consumer's credit card statement as "WLI Reservation Rewards."

The plaintiff named in the lawsuit, Massachusetts-based Joe Kuefler, bought movie tickets from Fandango. Mr. Kuefler claimed he was unknowingly enrolled in Webloyalty's rewards program at the time.

The complaint alleges violations of the Electronic Communications Privacy Act, unfair and deceptive acts and practices, unjust enrichment, invasion of privacy, money had and received, and civil theft.

The lawsuit, filed by law firms Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Lee & Amtzis, P.L., and Phillips & Garcia, LLP, seeks an injunction on the claims, compensation for consumers and other remedies.

"Hundreds, if not thousands, of consumers have complained to Webloyalty and local, state and federal consumer protection agencies about the deceptive nature of its sales of its Reservation Rewards discount club product and its unauthorized access to their credit card information," the complaint said.

Webloyalty supplies more than 1 million subscribers with reward, discount and protection programs. Webloyalty clients, which include more than 120 e-commerce and travel businesses, benefit from increased revenue and repeat purchases. Consumers are provided with subscription services that match their needs and interests.

According to Webloyalty and Fandango, the offer regarding the Reservation Rewards program, as made to Mr. Kuefler through the Fandango Web site, was a multi-step process that made numerous, clear, complete, and accurate disclosures.

The process "neither enrolled Mr. Kuefler, or any other customer, automatically in the Reservation Rewards program, nor did it entail the use or transfer of Mr. Kuefler's, or any other customer's, credit or debit card information without Mr. Kuefler's, or the applicable customer's, informed and affirmative consent," Webloyalty and Fandango said.

A copy of the enrollment page that appears in the motion can be viewed here.

"There were a lot of allegations about what [Mr. Kufler] saw and didn't see before he joined, [but] for every person who joined our service, we know specifically how they joined," Mr. Fernandes said. "Essentially, there is no way for then to join unless they go through specific actions on the pages that we put out on the Internet.

"It's actually easier to not join our program than it is to join our program," he said. "To not join, you don't do anything. To join, you have to go through a number of steps. That's an important point."

In addition, Mr. Fernandes said that Mr. Kufler actually got his $10 back.

"He was billed once, he called, and he got his money back within 24 hours of calling," Mr. Fernandes said. "This all happened eight months before the lawsuit was filed."

Mr. Fernandes said the companies "filed a motion for summary judgment, which is actually fairly unusual in this case, but we think the lawsuit has such little merit, that this was the best approach for us. The motion for summary judgment essentially means that we are trying to get this suit thrown out before it starts."

As for next steps, "the people who filed the lawsuit will file a response to our motion, and the court will set a schedule for the next few steps," Mr. Fernandes said. "How long it takes and what happens is really up to the court at this point."

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