The Scam Artists Just Got Busted

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This one just popped up on my radar. The first to spot it was Joe Lilly who wrote about it on his blog. It’s the Senate Bill 3386 the “Restore Online Shoppers’ Confidence Act” which was signed into law in the USA on December 29th by President Obama.

This is another step towards getting rid of the scam artists who currently may be using doubtful tactics to get people into continuity programs. These are not “Value Trojans” as advocated by Mike Hill but hidden third party monthly billing subscriptions that people using websites like 1800flowers, Buy.com, Classmates.com, Columbia House, Expedia, Hotels.com, Fandango, FTD, Hotwire, MovieTickets.com, Orbitz, Priceline, Shutterfly, Travelocity, US Airways and Vista Print. Each of these companies has received over $10 million in revenue using these tactics according to the report. Hundreds more received less.

Here are the highlights from Joe Lilly‘s  post:

  • The bill expressly prohibits data transfer of any consumer financial information for the purpose of billing a 3rd party transaction. For post-transaction upsells, billing information has to be re-collected. Ouch.
  • The bill requires material terms of all negative option offers to be disclosed prior to the collection of consumer billing information.
  • The bill includes references to credit, debit, AND bank account information (meaning that the ACH and check 21 billers in the industry are no longer off the hook.)

Post transaction processing is NOT just a basic up-sell. TechCrunch featured a “Wall of Shame” two years ago when the bill was still in the ‘report’ stage.

The legislation will have a large impact on e-commerce sites that are not being completely open with their customers, most of whom would be willing to  re-enter their data if they knew what they were going to get good value from the monthly subscription they were buying and were completely sure that their data would be treated with the maximum respect.

Requiring third-parties to get the information directly from customers is much better than allowing businesses to pass sensitive data like that without their knowledge or consent.

I bring this to your attention as a small business owner because your product marketing strategy should rigorously steer clear of lazy money grabbing tactics like post transaction processing. A new customer is the most expensive asset your business has.

Over delivering and under promising is the way to build your brand. It is these so-called big players who are giving the rest of us a hard time by reducing the general level of trust and sense of security that our prospects may have in buying online.

We will just have to work even harder to deliver the necessary levels of proof that establish our credibility and authority. Your product marketing strategy should be focused on this triangle of trust. Business used to be done on a handshake. When you gave your word, it used to mean something. It is high time that the scam artists got busted.

You can download the full text of the bill here

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Rory Ramsden