Monday, November 30, 2009

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Attorney General Abbott Charges Price-Comparison Web Sites With Misleading Shoppers, Taking Payments for Higher Ratings

AUSTIN – Texas Attorney General Greg Abbott today charged several “price-comparison” Web sites with unlawfully misleading online shoppers about the quality of certain Internet merchants. While the defendants promised independent, reliable Web site comparisons, state investigators uncovered a cash-for-ratings scheme in which certain online retailers paid for higher rankings. The state’s enforcement action comes as the holiday shopping season begins in earnest with the traditional post-Thanksgiving “Black Friday” shopping day – and its online counterpart, “Cyber Monday.”

According to court documents filed in two separate state enforcement actions, the defendants’ price-comparison listings misled potential shoppers about certain merchants’ reliability and trustworthiness. And while one defendant’s Web sites represented themselves as neutral and unbiased, online merchants paid that defendant to render higher ratings.

Media links

View Video of News Conference
Texas Attorney General's lawsuit against Intercept, L.L.C.
Agreed Final Judgment with Intercept, L.L.C.
Texas Attorney General's lawsuit against Everyprice.com Inc.

Today, the state filed an enforcement action against Intercept, L.L.C., which operates several price-comparison sites, including: Shopcartusa.com, Diduprice.com, Flyingprices.com, Digitalsaver.com and Pricingdepot.com. That legal action led to an agreed judgment wherein Intercept promised to correct its unlawful practices and either pay a $300,000 civil penalty or cease doing business at the end of November.

A separate enforcement action named Everyprice.com Inc., which operates the Web sites Everyprice.com and Lowpricedigital.com, for similar infractions. The defendant’s Web sites appeared to allow visitors to comparison shop – and therefore find the best deals – by using a single Web page to search for a product and obtain results from multiple merchants.

“With this year’s holiday shopping season kicking off in the midst of a down economy, many savvy Texans will try to maximize their dollars by using the Internet to research the highest-quality vendors with the lowest prices,” Attorney General Abbott said. “But online shoppers need to know that the Office of the Attorney General has charged multiple Web sites with unlawfully promising unbiased rankings while secretly accepting undisclosed payments for inflating sellers’ online ratings. So Texans should be wary and carefully consider their sources, because some Web sites may not be providing the unbiased ratings they promise.”

Although Everyprice.com held itself out as an unbiased, honest broker, its Web sites secretly steered shoppers toward certain merchants and did not disclose that the merchants were paying for favorable treatment. Thus, online shoppers who encountered vendors with “trusted sellers,” “quality sellers” or “recommended merchants” designations were not properly informed that the favorable labels were purchased rather than earned.

According to state investigators, Everyprice.com was not only paid for high ratings, but it allowed questionable merchants to create their own specialized endorsements for an additional fee. And although Intercept received numerous customer complaints about specific “endorsed” merchants, the defendant continued to rate them as “top sellers” that offered the “lowest legitimate prices.”

Customer complaints obtained by the Office of the Attorney General indicate that Everyprice.com’s highly rated merchants used bait-and-switch tactics to persuade customers to purchase more expensive products than they desired. Other complaints highlighted Everyprice.com’s deceptively impressive “five-star rating,” which merely required industry-standard privacy policies and product disclosures – such as whether an item was new or refurbished. The defendants used Google, Yahoo and MSN to advertise its Web sites worldwide.

The state’s enforcement action against Everyprice.com seeks civil penalties of up to $20,000 per violation of the Deceptive Trade Practices Act, plus appropriate attorneys’ fees. The state also seeks restitution where necessary to address financial injury to the Web sites’ users.

Texans who believe they have been deceived by similar fraudulent business practices may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.texasattorneygeneral.gov.