Squeaky-clean offer firm gWallet gets into trouble

Social gaming ran into its biggest scandal last fall, when allegations surfaced that offer companies were defrauding consumers presenting them with less than savory advertising offers, signing them up for subscription deals they didn’t really want.
That prompted a crackdown by Facebook and big social game companies like Zynga, who pledged to clean up the offers that they received from third-party monetization companies. Now gWallet, a new offer company with a previously solid, truthworthy reputation, has been caught running a handful of questionable offers, too.
We don’t want to exaggerate the problem here. At gWallet, it appears to be tiny, but the fact that it occurred is instructive. And it is happening against a backdrop of history where the industry has seen its fair share of trouble.
Offers allow gamers to pay for virtual goods — better weapons in battle or tractors for a digital farm — in games that are popular on social networks such as Facebook. With an offer, a gamer can agree to accept an offer, such as signing up for a Netflix subscription, in lieu of paying with a credit card. But TechCrunch asserted in its “ScamVille” stories that many of the offers were nothing more than scams.
After the controversy, all of the parties involved promised they would scrub their networks of these questionable offers. This scandal gave gWallet an opportunity to promote itself as a new, “clean” offer company. As Offerpal and other offer companies were dragged into the mire over the scandal last fall, gWallet emerged with a squeaky-clean reputation. Headed by serial entrepreneur Gurbaksh Chahal, the company raised $12.5 million in funding. That happened just as Facebook began enforcing new guidelines on offer providers. Since that time, gWallet revealed that its partners include Disney, Best Buy, K-Mart, Nestle, Coke and the History Channel.
VentureBeat asked gWallet about a few offers that appeared to be bad. gWallet responded by describing how they unintentionally slipped into its network and pledged to remove them. Chahal said in a phone interview that gWallet made just a total of $82.51 from the offers and that it resulted from a relationship with an affiliate, whose job was to supply offers as filler whenever gWallet itself did not have enough offers coming from its brand partners.
Chahal said it was unfair for VentureBeat to run a story about such a small amount of money, particularly when last fall’s scandal involve huge sums of money that did a lot of consumer harm. To us, the money or the number of consumers who may have been deceived wasn’t important. We wanted to know how these offers could slip in.
Chahal said that the company is focused on running only ethical offers that meet strict guidelines. He noted that TrustE is certifying that the company’s offers are solid. He noted that while rivals have thousands of offers, his company runs maybe 200 or 300 offers altogether and can police them better.
Through the use of affiliate ad networks, the company filled inventory as needed with third-party offers, which is evidently where these problem offers originate. The revenue from those offers is maybe 20 percent of the company’s business and is heading toward zero as the brand relationships take off, Chahal said. In response to our query,  gWallet found that the affiliate was submitting offers to gWallet, which approved them to run in its partners’ games. In some of those offers, the advertisers evidently changed the landing pages or added pop-up screens that were in violation of standards. Chahal said gWallet did not know this was happening. gWallet is now dropping the ad aggregator network. A spokesman for the affiliate says the information here is not correct.
“If there are any issues on a one-time basis, we will take action and make sure none of this is repeated,” Chahal said. “There is no point in us running scammy offers as our revenue is shifting almost entirely to the established brands.”
Rival offer companies like Offerpal, Super Rewards, and TrialPay say they are being more diligent about making sure their offers are no longer perceived as deceptive. That’s why it’s surprising to see these examples on gWallet’s network of offers. It just goes to show that it’s not as easy as it seems to block questionable offers, despite the best of intentions.
Take a look at these screen shots below of various gWallet offers in the game FooPets on Facebook. The first simply shows the gWallet option you can choose when you want to pay via an offer instead of with real cash.

It looks innocent. And gWallet announced last week that it had partnered with online privacy certification company TRUSTe to reinforce ethical guidelines. But below are some of the questionable gWallet offers that users can choose in FooPets. (gWallet is removing them). Marked in red are some of the problems associated with those offers.

As an example, pictured at right is the landing page for EliteMate, a dating site featured in gWallet’s offers. A pre-checked box at the bottom of the page opts you in by default to receiving emails from third-party affiliates of EliteMate. If you try to close the window, you get two pop-up boxes. All of these features are violations of Facebook’s guidelines. gWallet said that it missed the small pre-checked box in its own analysis of the offer, and it did not know about the pop-up pages, which were added after its review of the offer.
The “Tight Tunes Free Music Downloads” offer is similarly problematic. When you click on this offer, you wind up on the landing page pictured below. There’s a lot of fine print at the bottom that says the company will collect your personally identifiable information. It further states that the company will share that information with its affiliates or partners. And it says it will share the data with future partners as well. This may violate Facebook’s guidelines on offers or violates Facebook’s privacy policy. However, the use of personally identifiable information is  a gray area, particularly if a company gets permission from the user. The question here, of course, is whether consumers truly realize from the fine print that their data is shared.
These are just two examples of questionable offers. Each one of the red-tagged offers is similar, and these offers were all running as recently as March. We fully expect that gWallet will remove the bad offers and go on to focus on the squeaky-clean part of the business. Competitors will no doubt crow with delight, but I suspect that gWallet will recover from the black eye to its reputation. Chahal points out that his platform allows his customers to see what offers are running and lets them delete any offers they don’t like.
What’s the conclusion? This story shows the problem of promising to wear the white hats in an industry that is in its Wild West stage. It is always easier said than done.
Some of the problem is a matter of scale. There are and always will be lots and lots of offers. It takes a human brain to evaluate them, but humans can’t keep track of a huge number of them. So it may be hard to police offers. Yet, now that the spotlight is on this industry for its past history, it’s more important than ever to spot every single bad offer, no matter where  it comes from.
Tags: offers, social games
Companies: Gwallet, Offerpal Media, Super Rewards, TrialPay
People: Gurbaksh Chahal