I believe in karma. I may be slinging venom in this weekly column -- where I shred a company to bits -- but I'm no meanie. I always come right back and offer up three related recommendations that I feel will be better fit in your portfolio. It's the right thing to do.  

Who gets tossed out this week? Come on down, United Online (NASDAQ:UNTD).

United we strand
I've been a fan of United Online in the past, although I was never too crazy about its original online access business. NetZero and Juno may be cash flow beasts, but dial-up connectivity is all but dead, and providing Internet service is way too cutthroat at the broadband level.

I've typically gotten a better vibe from the company's non-connectivity businesses. In particular, I've been a member of its MyPoints.com loyalty marketing program since it was owned by the unlikely United Airlines (NASDAQ:UAUA). As a predecessor to Facebook, Classmates.com is one massive makeover away from competing in the social networking space. FTD was a huge -- and sorely misunderstood -- acquisition last summer, providing orders and related services to roughly 45,000 florists. It's a lead generator, which makes FTD little different from what United Online is doing through MyPoints and Classmates.

Alas, I'm not so high on the company's non-access business these days.

United Online shares took a 10% hit yesterday, snagged in the collateral damage of Senate hearings in which online loyalty programs are under fire. Let's not confuse this with the MyPoints loyalty marketing program, a free site where folks receive gift cards for shopping through affiliated merchants. The three leading loyalty-program operators have reportedly collected $1.4 billion over the years, teaming up with e-commerce specialists to deliver leads. 

No, United Online is caught in this mess because FTD and Classmates are two of the largest lead-referrers. If you have ever signed up for a premium Classmates.com account or ordered through FTD.com, and come across a shady promo during the checkout process -- offering an incentive for your email address when you sign up for a loyalty marketing program -- you've seen this firsthand.

Unsuspecting shoppers think that entering an email and agreeing to terms is harmless, but they're actually agreeing to have the loyalty marketing company charge their credit cards monthly for membership in the program. The companies have your credit card information, because they're in cahoots with the participating merchants. Classmates.com alone has supposedly scored $70 million in revenue through the three providers. Now that revenue is likely to dry up, the company's reputation will take a huge hit, and United Online will be lucky if it escapes without punitive damages or class action lawsuits.

In short, it's just not worth the risk. United Online's latest quarter brought a slight drop in profitability on a 28% top-line increase. Before you get too excited about the revenue spike, remember that United Online didn't acquire FTD until the second half of last year's quarter. If you back out FTD, revenue at the rest of the company fell by 9%, as an 18% dip in connectivity dragged down flat results at Classmates/MyPoints.

United Online is an ethical tangle with considerable financial implications. The low P/E ratio and healthy 5.2% yield may be tempting, but that can all come undone in the future. Fools, you can do better.

Good news
As I do every week, I don't talk down a stock unless I have three alternatives that I believe will outperform the company getting tossed out. Let's go over three new fill-ins:

EarthLink (NASDAQ:ELNK)
As the pure access play, EarthLink isn't doing so hot. Revenue fell 24% in its latest quarter, as its total subscriber base shrank from 3 million to 2.3 million. Even United Online held up better than that. However, EarthLink is profitable, and it has more than $6 a share in cash on its balance sheet (even if it's preparing to subtract roughly $2.50 a share in convertible senior notes). With its 6.5% yield, investors are being paid well for holding this fading cash flow beast. EarthLink still has time to diversify, or at the very least gobble up the access business of United Online or Time Warner's (NYSE:TWX) AOL at fire-sale prices.  

Amazon.com (NASDAQ:AMZN)
When it comes to e-commerce integrity, there's a reason why Amazon is the top dog. You'll never see deceptive third-party pitches during the checkout process here. Net sales rose 28% in its latest quarter, as earnings catapulted 68%. This is good karma in action, as doing the right thing helps the e-tail giant continue to gobble down market share.

IAC (NASDAQ:IACI)
I'm still a fan of MyPoints, but the search engines are crashing its loyalty-marketing party. Ask.com's "deal$" shopping homepage and Microsoft's (NASDAQ:MSFT) Cashback are offering searchers tangible rebates, without having to build up archaic point levels. Beyond Ask.com, IAC also operates dating site Match.com, local tastemaker Citysearch, and dozens of other popular sites.

Sorry, United Online. Call me when you fix your loyalty-membership mess.