Webloyalty Named In Class Action Lawsuit

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Customers of several popular online retailers, including Fandango.com, Priceline.com and Staples.com were victims of an alleged Internet scheme in which their credit cards were charged a monthly fee for a "discount club" membership they had never requested, according to a class action lawsuit filed last week in US District Court in Massachusetts.

The lawsuit accuses Webloyalty.com, an online marketing services company based in Norwalk, CT, of engaging in a "coupon click fraud" scam in which credit card information was automatically transferred to Webloyalty by its dozens of online business partners -- such as Movietickets.com, Petco.com, and FTD.com -- without consumers' knowledge or consent. The lawsuit seeks an injunction on the claims, compensation for consumers and other remedies.

In a statement published last week, Webloyalty.com announced that the lawsuit is without merit. "The lawsuit is frivolous," said Rick Fernandes, CEO and co-founder of Webloyalty.com. "It completely misrepresents the manner in which Webloyalty.com conducts its business. We intend to vigorously defend ourselves and expect to prevail."

Webloyalty supplies more than one 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 benefit from high value subscription services that match their needs and interests.

The lawsuit said when customers bought from one of Webloyalty's partners such as Fandango and clicked on a pop-up window offering a $10 coupon on their next purchase, their credit card information was automatically transferred to Webloyalty and they were unwittingly enrolled in its "Reservation Rewards" loyalty program.

The complaint says that once enrolled in the program, which promises rewards such as movie tickets and shopping discounts, consumers' credit cards are billed up to $10 each month.

"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.

The plaintiff named in the lawsuit, Joe Kuefler, bought movie tickets from Fandango and was unknowingly enrolled in Webloyalty's rewards program.

The lawsuit also claims that Webloyalty and Los Angeles-based Fandango, a codefendant in the case, violated consumers' privacy rights by disclosing and using their credit card information and are engaging in deliberately deceptive business practices, illegally netting the company substantial sums of money from the consuming public.

The lawsuit filed by law firms Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Lee & Amtzis, P.L., and Phillips & Garcia, LLP, alleges violations of the Electronic Communications Privacy Act, unfair and deceptive acts and practices, unjust enrichment, invasion of privacy, money received and civil theft.

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