I wrote here a couple of months ago about the shady practice among a few Internet retailers of handing off customers who accept a “special offer” to a company that charges people a monthly fee for some kind of credit monitoring service. And I argued hopefully that maybe technologists and the Internet community could generate a response to this problem:
Being a smart, informed, and aggressive consumer is each person’s responsibility if a free market is to operate well. The alternative is a negative feedback loop in which government authorities protect us, we rely on that protection and stop policing retailers. Thereby we abandon the field of consumer protection to government authorities, who—try as they might—can never do as good a job for us as we can for ourselves.
The Senate Commerce Committee is having a hearing today on “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers.”
Our job here at TLF is generally to talk about policy as opinion leaders, but I tend to be a little campaign-y sometimes. When I see something I don’t like, I’ll use this platform to sound off about it.
It appears that ProFlowers.com engages in a shady practice: handing customers who accept a “special offer” from them to a company that charges people a monthly fee for what appears to be some kind of credit monitoring service. There are write-ups of varying depth and quality here, here, here, and here.
Question: Does the Internet provide enough feedback to suppress this practice? How could the e-commerce ecosystem be changed to alert people about this kind of thing ahead of time?
Being a smart, informed, and aggressive consumer is each person’s responsibility if a free market is to operate well. The alternative is a negative feedback loop in which government authorities protect us, we rely on that protection and stop policing retailers. Thereby we abandon the field of consumer protection to government authorities, who—try as they might—can never do as good a job for us as we can for ourselves.
Should we each run a “scam” search on new online businesses before we deal with them? Maybe so. But that’s a little clunky. With the popularity of Firefox plug-ins for problem solving around here, maybe one of the consumer review/complaint sites could develop a plug-in to provide people reviews of a retailer as they visit the site.
I hope that prompting a conversation around the apparent ProFlowers.com credit card ripoff scam will alert savvy shoppers to a risk of doing business with them. (For the sake of searchability, feel free to blog a little bit yourself about the apparent ProFlowers credit card ripoff scam.) Perhaps this discussion will also generate a systemic fix that preempts shady dealings of the type alleged here.
You really have to hand it to the folks over at the (Un)
Ah yes, “Internet fairness.” Who can possibly be against it? Well, before you rush to click send on that UnFree Press form letter, let’s be clear what this effort is really all about. Free Press claims that the Massa bill is needed because “phone and cable giants [are] weighing schemes to hike prices, shut down the free-flowing Web and keep user innovation in check.” How are those companies doing that? Tiered pricing! Rep. Massa says that, “Time Warner has announced an ill-conceived plan to charge residential and business broadband fees based on the amount of data they download.” Oh my God, no… you mean some people might be charged for the costs they impose? What’s next? Are we going to force people to pay for their own energy use by metering gasoline, electricity, or water? Think of the horror! (This is sarcasm, folks. All those things are metered currently. And yet, somehow, the Earth hasn’t spun off its axis.)
Like all the other propaganda produced at the Free Press techno-spin factory, their latest crusade is based on a combination of outright lies and blatant economic ignorance. Metering broadband access is not an effort “to restrict Internet use,” as Free Press claims. Rather, like every other metered system under the sun, it’s an effort to price a scarce resource in such a way so as to
maximize use. Broadband operators don’t sit around all day scheming to find ways to decrease network usage. They wouldn’t make any money that way!! They need to find business models that encourage increased uptake while also investing in and growing their networks to meet new demand and competitive challenges.
Moreover, there are other pro-consumer reasons for companies to consider metering options. Unless it is your goal to allow some particularly aggressive users to be subsidized by all other users, it is sometimes sensible to price usage based on demand. If you don’t, you potentially create a perverse incentive for a small handful of over-grazers to to be feeding at the trough at everyone else’s expense. As economist Russell Roberts aptly noted in the title of a famous 1995 Wall Street Journal editorial, “If You’re Paying, I’ll Have Top Sirloin.” Thus, you would never want to make the “all-you-can-eat” pricing model the only option for the provision of a scarce resource. Even if you choose not to deploy it, it is useful to have the metered pricing model available in case you need to charge the over-grazers at some point.
Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.