Hundreds of customers have complained to TRUSTe that Classic Closeouts made unauthorized credit-card charges, ranging from US$30 to $80, to their accounts, says John Tomaszewski, vice president of legal guidance and privacy at TRUSTe, the organization which administers the privacy and consumer protection program.
"We spent a lot of time trying to solve the problem," Tomaszewski says. The issue first came to TRUSTe's attention around June when hundreds of people contacted the organization with complaints about the online retailer.
The "TRUSTe" seal is displayed on hundreds of Web sites operated by online businesses that agree to abide by TRUSTe's consumer privacy and protection guidelines, as well as pay an annual fee for monitoring adherence to them and letting TRUSTe act as an intermediary in any disputes that crop up.
Classic Closeouts joined the TRUSTe program more than a year ago, Tomaszewski says. After customers complained about the unauthorized credit card charges, Classic Closeouts at first indicated to TRUSTe that a technical glitch related to an e-mail marketing campaign (possibly sent to as many at 700,000 recipients) resulted in several hundred consumer credit cards being charged by Classic Closeouts.
"The company was having a hard time identifying who had been charged incorrectly," Tomaszewski says.
But as the months went by, TRUSTe determined that Classic Closeouts was not adequately resolving the problem. "They were not willing to be proactive and reimburse those cards. They were waiting for the customer to complain," he says.
In late September, TRUSTe took the step of revoking the online retailer's right to display the TRUSTe seal and terminated the company from its consumer-protection program.
The Classic Closeouts Web site displays little information about the firm, and has not returned calls placed by Network World.
Fran Maier, CEO of TRUSTe, called the program termination of Classic Closeouts a very unusual step. There are about 2,400 merchants in the TRUSTe consumer privacy and protection program, she says, and while consumer complaints do crop up, the TRUSTe arbitration process is generally effective in resolving disputes with a merchant.