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Webloyalty Scams Fraud Club Membership Fees

A lawsuit against an online fraud scam was filed in Massachusetts's District Court. The scam involved customers of various online retailers like Fandango.com and Staple.com who fell victim to the scam with charges of membership fees being deducted from their credit cards for a club. In reality these individuals did not availed themselves of any such membership.

With the "Coupon click fraud" scam customers' credit card details were transferred to Webloyalty.com, an Internet marketing firm. The firm's various online partners like movietickets.com and FTD.com facilitated this transfer without the customers knowing about it.

The law firm, Lerach Coughlin in San Diego, filed the lawsuit. According to Stuart A. Davidson, a lawyer of the firm, there were a large number of retailers who were involved in the fraud scam. They were acquiring huge proportions of money from Webloyalty that was has been stealing from the country's consumers.

Chief executive of Webloyalty, Rick Fernandes, however, denied the accusation made on it. He said that the allegations were absolutely without substance and the lawsuit misinterpreted its business conduct. They were full of errors and the company was aiming to win the case in the process.

The sequence of events in the scam was described in the lawsuit. When the customers made purchases from the web retailers, a pop-up came on the screen that asked for the customers' e-mail addresses, other personal details and credit card numbers. In return it promised a coupon of $10 on the next purchase deal. The information was used for no fair purpose but to transfer it to Webloyalty. Webloyalty then charged the customers for a monthly fee of $9-10 as membership fees for a discount club named "Reservation Rewards". The customers had to contact Webloyalty to withdraw their membership failing which demand for monthly fee recurred. Webloaylty retained the fees and distributed a potion to its retailer partners on a 'per-customer' basis.

Accusing Webloyalty of victimizing hundreds of thousands of customers, Davidson described the company as running a 'securities fraud boiler room' that earned millions of dollars from the consumers' pockets.

The lawsuit claimed that Webloyalty and its partner companies violated 'consumers' privacy rights' by revealing and using their credit card information.

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