Some Web sites make money by helping consumers save money

SAN FRANCISCO (AP) _ It's a holiday tradition for many people: opening the newspaper over the Thanksgiving weekend to digest all the ads stuffed with bargains. <br><br>But all those post-Thanksgiving

Thursday, November 28th 2002, 12:00 am

By: News On 6

SAN FRANCISCO (AP) _ It's a holiday tradition for many people: opening the newspaper over the Thanksgiving weekend to digest all the ads stuffed with bargains.

But all those post-Thanksgiving sales already are old news to the thousands of consumers who frequent bargain-hunting Web sites that help people save money online and off.

In fact, some of these sites pass along sensitive sales information in advance, rankling store chains.

That's what happened earlier this month when a few deal-sharing sites infuriated Wal-Mart, Target and other retail giants by posting confidential information about the stores' post-Thanksgiving sales.

After the retailers threatened to prosecute for alleged violations of digital copyright laws, two things happened: The sites removed the sales lists, and news coverage of the breach drove even more consumers there.

Traffic at FatWallet.com is up by about 20 percent since the merchants issued their Nov. 20 legal threats, said Tim Storm, owner of the Roscoe, Ill.-based service.

The retailers ``ended up doing us a favor by bringing more attention to us,'' Storm said. ``If people hear about an opportunity where they might save more money, they are going to want to find out more about it.''

This being the holiday shopping season, the timing couldn't have been better for the bargain-hunting sites.

The sites make money by collecting customer referral fees and sales commissions. In some cases, merchants even pay to have their coupons and other deals displayed prominently.

But the sites also rely heavily on a community of frugal shoppers who post information about coupons and other deals. Special software enables the sites to collect their referral fees when visitors click on a deal.

The crackdown on the Thanksgiving leaks prompted an outcry on online message boards. Many consumers noted that the postings amounted to free advertising for merchants, and some even urged a boycott of the stores that demanded the removals.

Merchants, though, believe they have the right to control when information is released.

``It's a question of fairness for us,'' said Wal-Mart spokesman Bill Wertz. ``We don't think it's fair for some consumers to have information like this ahead of others.''

In other instances, the bargain-hunting sites have antagonized retailers by pointing out mistakes at e-commerce sites so people can capitalize on them before merchants fix them.

The sites ``are all about trying to take advantage of the system,'' said Pamela Swartwood, a spokeswoman for PriceGrabber.com, one of several popular online price-comparison sites that work closely with retailers.

Other popular bargain-hunting sites include DealCatcher, FlamingoWorld, MyCoupons, DealoftheDay, Amazing-Bargains and CleverMoms.

Their audiences are relatively small. FatWallet, for instance, has 45,000 registered users.

But the relentless pursuit of bargains has helped turn FatWallet and other such Web sites into profitable businesses, according to their owners.

``We have been profitable from the first day,'' Dan Baxter said of 3-year-old Dealcatcher.com. The site has grown from an experiment that the 25-year-old Baxter once ran from his bedroom in his parents' Wilmington, Del., home to a four-employee business with its own office.