New York in the news: New York investigates Web retailers on hidden fees

New York

NEW YORK (Reuters) - New York Attorney General Andrew Cuomo is investigating 22 retailers for directing online shoppers to fee-based membership programs of discount clubs that often contain hidden charges.

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Cuomo sent subpoenas to websites for major retailers such as Barnes & Noble, Avon and Staples, which have deals with three companies that offer such discount programs, namely Webloyalty, Affinion/Trilegiant and Vertrue.

Cuomo said in a statement on Wednesday that his office also reached an agreement with online movie ticket retailer Fandango to end similar practices. Fandango is a unit of Comcast Corp.

Cuomo's investigation has found that online shoppers are often unknowingly directed to a membership program seller's website that is separate from the online retailer's site.

Information about the membership program and its ramifications are often buried in fine print and cluttered text, Cuomo said. For instance, a customer clicking on the link automatically and unknowingly consents to a transfer of his or her credit or debit card account information.

"Well-known companies are tricking customers into accepting offers from third-party vendors, which then siphon money from consumers' accounts," Cuomo said.

The subpoenas seek information about retailers' practices of sharing consumers' account information with membership program companies, their knowledge of any deceptive practices and compensation from the membership companies.

Barnes & Noble said it would co-operate with Cuomo's office.

"Barnes & Noble does not and has not shared customer debit or credit card information with these outside companies. We seek to protect our customers from these type of practices," the company said in a statement.

Other subpoenaed merchants include Ticketmaster Entertainment's Ticketmaster.com, Priceline.com and Gamestop Corp

Avon, Ticketmaster.com, and Staples representatives did not immediately respond to requests for comment, while Gamestop declined to comment.

Priceline said in an e-mail statement that it discontinued offering Affinion membership programs in November and is co-operating with the investigation.

In a statement, Vertrue said it was fully cooperating with the request for information from Cuomo's office.

"The company will no longer conduct 'datapass' marketing on the Internet and has already begun to work with its marketing partners to effectuate this change as soon as possible," Vertrue said.

(Additional reporting by Phil Wahba; Editing by Derek Caney, Robert MacMillan and Steve Orlofsky)