Colorado Attorney General John Suthers joined 46 states and the District of Columbia today to announce that Connecticut-based Affinion and its subsidiaries Trilegiant and Webloyalty, will pay a total of more than $30 million to settle allegations that the companies misled consumers into signing up and paying for discount clubs and membership. The settlement resolves allegations of deceptive advertising and enrollment by Affinion in its discount clubs and membership and establishes a $19 million fund to refund consumers.
“Affinion charged approximately 7,600 Colorado consumers for services without their authorization or knowledge,” said Suthers. “Once consumers learned they were being charged, people had trouble canceling or receiving refunds. Many consumers were confused about who Affinion even was because the offers appeared to come from the companies’ marketing partners, which typically were banks or retailers with which the consumers did business,” explained Suthers.
Affinion runs multiple discount clubs and membership programs that offer a variety of services such as credit monitoring, roadside assistance, and discounted travel. Affinion markets these programs through a series of agreements with “marketing partners” – well-known banks and retailers that present these programs to consumers often immediately after the consumer has engaged in a transaction with that partner. Affinion’s programs are marketed via direct mail, online, telemarketing, and in face-to-face point of sale transactions. Affinion charges a monthly fee to consumers for these services, which continues until the consumers affirmatively cancel.
The states’ investigation uncovered several of Affinion’s marketing practices that misled consumers, including a lack of clear and conspicuous disclosure about Affinion’s identity, and the cost and ongoing nature of the charges. Most troubling were two marketing practices of Affinion – live checks and online data pass. In a live check solicitation, consumers were sent via direct mail an offer that appeared to be a check. However, when consumers endorsed and deposited the check, they unknowingly authorized Affinion to enroll them in membership programs, and to bill them each month indefinitely. In an online data pass offer, consumers were presented an Affinion offer immediately after an online purchase from a retailer. Affinion then enrolled and billed consumers without acquiring any of their account information because the marketing partner would pass that information on to Affinion. As part of today’s settlement, both practices are now prohibited.
Today’s settlement also includes further changes to Affinion’s business model by requiring that the company provide clear and conspicuous information to consumers after enrollment regarding their membership, periodic reminders of their enrollment, and changes to cancellation practices. Colorado also will receive $25,000 in fees and costs as part of the settlement.
There are two ways consumers can seek refunds under this settlement: by returning a claim form that they receive in the mail and/or email or by filing a complaint. Under the claim method, Affinion will provide a written notice and claim forms within the next two months to all consumers who enrolled in the membership programs since January 2008 and who did not cancel or receive refunds. Consumers who receive the written notice must return the claim form in order to cancel their memberships and receive reimbursement of their membership fees. It is important that consumers indicate on the claim form that they did not knowingly agree to be enrolled in the membership program. Affinion will administer the restitution payments out of the $19 million restitution fund to the “notice” consumers.
Consumers may file complaints with the Consumer Protection Section of the Colorado Attorney General’s Office at www.coloradoattorneygeneral.gov/complaint or by calling 1-800-222-4444. Consumers checking their credit card and bank account statements should be looking for the names of Affinion’s membership programs, as often that is how the company’s charges appear on their bills. A complete list of Affinion’s membership programs are listed here. Consumers must submit their complaints to the Attorney General’s Office by February 14, 2014.
The states included in the settlement are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming. The states that led the investigation were California, Texas, Tennessee, Iowa, Vermont, Washington, Oregon, Maine, and Illinois.