The background-check scams: Is WhitePages really better than Intelius?

updated
WhitePages has released a mobile application on the BlackBerry Bold that, among other things, lets you screen incoming callers to see who they are before you answer. For example, it lets you see if a caller is a telemarketer by checking the number against its database of profiles (video demo here). It will follow on other BlackBerry models soon.

More on the cool app in a sec. First, though, that the company’s released a call-screener is ironic, because White Pages itself has somewhat dubious tactics when it comes to marketing.

The private company took in $66 million in revenue last year, up from $62 million the year before, we’re hearing. A competitor, Intelius took in $123 million last year, up from $88 million, our sources say. There’s tons of money being made, apparently. How?

White Pages lets you find out all kinds of information about people. Its search service is free, the company likes to say. For example, it offers things like a free reverse phone book service, i.e., letting you put in a phone number to search for the I.D. of the person owning the phone number. But for many searches, “free” takes on another meaning.

For example, say you search for information on a person named “Pam Weiners.” When clicking on the results for “Pam Weiners,” you’re eventually directed to a page that asks you pay $1.95 to review the report. Let’s say you’re ready to pay. Even then, you get thrown into a wild goose chase. You click to fill out some credit card information, but it takes you to a page that offers you a $10 cash back reward on your next purchase. Well, only after reading some fine print do you see it will charge you $12 per month on your credit card. At the bottom of the page, a big “Yes” button lures you. Being clever, you look around the page and scroll down and finally find the small font wording “no thanks, not right now.” But if you click on it, you get another offer. This happens two more times. It’s seemingly impossible to get to the information you paid for. Finally, on the third attempt, if you make it that far, you might notice a “view report” button to the left amid considerable noise, and can then access it — but its far easier to continue on the loop. I tried it out with several names. A couple of times, when I clicked “no thanks,” the service simply took me to an error page (see screenshots below).

I talked with John Lusk, spokesman for WhitePages, and he acknowledged the practice but said it was offered by a third party company called US Search. I looked at the pages, and they do have US Search branding, but I was never really informed at the outset that I was being transferred to the third-party page. Lusk says that’s about to change, and that the company this week launched a new version of its site to a tenth of its users that makes it much clearer US Search is not the same company. He said it’s part of major rebranding effort by the company to make sure it restores trust with users. It will be fully rolled out by June. However, the redirects will still happen. And WhitePages is stuck: The company is sort of addicted to the money it gets from US Search for directing it the traffic. It gets paid for every click through to the US Search page, and that income is much more lucrative than the advertising WhitePages gets to its own services.

Of course, this comes at a time when a competitor named Intelius is getting dinged for similar practices. Last month, there was a long piece in the Seattle Weekly outlining some post-transaction charges that Intelius customers were getting hit with using the same small-print tactics. TechCrunch also also ran a piece about it. There’s no need for me to duplicate all the good research performed by the Weekly. But here’s what happened when I tried out Intelius. After filling out the credit card information, I was presented with an offer very similar to the one given to me over at White Pages/US Search, with a big “yes” button luring me to get it. But Intelius was at least clear about forcing me into a step by having me acknowledge I was about to pay $19.95 per month on my credit card. It also let me choose no and did so without sending me through the continuous loop. So in my book, Intelius is certainly no worse than WhitePages. Intelius said isn’t talking to the media, because it is its “quiet period” before going public.

Last week, VentureBeat reported that Intelius has acquired Spock.com, and I had a chance to talk to Spock.com founder Jaideep Singh about Intelius’ practice. He argued that all commerce sites, including Amazon, and travel sites, try to bundle products after you’ve purchased something and that most users have become accustomed to checking the small-print. He said he saw nothing extraordinary about Intelius.

[Update: Well, Naveen Jain, Intelius’ chief executive, did respond after all: “We at Intellius care a lot about our users and the kind of services we provide them, that’s the reason we only offer the best quality services, and do not hide behind another company that may be using deceptive practices.”]

Here’s where things stand: Intelius processes 3 million transactions a year and has had 890 complaints over those three years lodged at the Better Business Bureau — however, those complaints have since apparently been closed or resolved. Amazon, by comparison, a much larger company, has about 2,400 complaints. In other words, despite customer complaints by a minority, the vast majority of people seem to be putting up with these practices.

Back to WhitePages. It recently struck a partnership agreement with MSN.com, taking it away from Intelius. So now you can do background checks on people through MSN.com by clicking on “White Pages,” and the process takes you through the exact same process as you’d go through on WhitePages — getting taken to US Search and given the constant run-around if you want to avoid paying extra fees. (That’s the example I’ve shown below).

[Update: Intelius’ Jain also had something to say about this: “The fact is, MSN users are still being subjected to these deceptive practices done by their partners. Having a company hide behind a different company, saying these deceptive practices are being done by a different company does not take away its responsibility to users.]

So back to the WhitePages app for the BlackBerry. It’s actually very cool. Unlike the app released for the iPhone in October, this application is able to integrate itself into the actual hardware of the BlackBerry phone — this way, it is similar to the WhitePages application recently released for the Android. However, the Android app just offers caller-ID. BlackBerry lets you do more, such as pull numbers from your call-log and look up information about the number-owners. If you get an incoming call from someone who isn’t in your address book, the app can ping the WhitePages database and find out if it’s a telemarketer. Or, if you choose, you can add the person’s name and other information to your contact list automatically. You can also use it to do company search — entering a company’s name with a person’s last name — to find their phone number, address and other information. You can get maps and directions too. You pay $6.99 for six months of service. I think this is great, because it gives WhitePages a source of revenue that is independent of advertising, and so maybe it will help it distance itself from the scam-like partnership with US Search. Better yet, the service is opt-in, meaning you won’t get charged $6.99 automatically after six months.

[Update 2: WhitePages chief executive Alex Algard responded with the following statement: “I think that the headline and positioning of your story is unfair. WhitePages does not do background checks, and we do not do post-transaction marketing. Some companies do, but we have chosen to not engage in that practice. End of story on that. Furthermore, I do not think it is fair to blame WhitePages for what might potentially happen on the websites of third-party websites, who advertise not only on WhitePages.com, but also other sites like Google and MSN, especially when we make it clear to users that they are clicking on sponsored ads. You included 8 screenshots, of which two are WhitePages-powered web pages. In your screenshot example, we make it clear to the users that they are clicking on ‘sponsored’ ad links. If you want to make an issue of post-transaction marketing, I do not think that you are picking on the right company.”]

[Update 3: I’m going to stop updating. The discussion continues in comments below.]

Below are screenshots of the WhitePages-US Search maze — they continue after the jump.