DENVER — Colorado Attorney General John Suthers announced today that attorneys for the state reached a settlement agreement with Nutra Pills, Inc., and its owner, Joshua D. Bezoni, to bring the Internet marketer and seller of nutritional supplements, including acai berry supplements, into compliance with Colorado’s consumer protection laws and to reimburse consumers who did business with the company over the last year.
The Office of the Attorney General learned through its investigation that Bezoni’s Arvada-based company, which has operated under the names Golf Nutrition Sciences and GNS, used so-called “free-to-pay conversion” marketing since 2005, which resulted in consumers unknowingly incurring ongoing payments for products that they initially believed were free. Consumers, according to court filings, signed up for free trials of products, such as Acai Berry Edge, Acai Berry Elite and Slim Seduction, and believed at the time they placed their order that they were authorizing only the shipping and handling charges for the free trial. When the free trial arrived, however, consumers also received a two-month supply of the product and were given a limited amount of time to return the product or face a nearly $80 charge within 30 days.
Additionally, if consumers failed to take any action to cancel their order and send back the two-month supply of product, they were enrolled into the company’s “continuity” plan, which meant the company continued to send products to the consumer and charge the consumer nearly $80 for each shipment. More than one thousand consumers complained that they had no idea they were agreeing to the additional charges associated with the free trial offer and that once they did realize it, it was often too difficult or too late to get a refund from the company.
The company generated $40 million in sales in 2009, nearly all of that was a direct result of its free-to-pay conversion sales. Since the Attorney General launched its investigation into Nutra Pills one year ago, the company has refunded nearly $9 million dollars to consumers and has ceased doing business.
“Our office and our partners at the Better Business Bureau receive thousands of complaints every year concerning free-to-pay conversion schemes,” Suthers said. “This agreement will ensure that Mr. Bezoni’s future businesses will be required to clearly disclose exactly what consumers are signing up for when they request a free sample. Consumers should always beware of any offer that purports to be free. If it sounds too good to be true, it probably is.”
Under the terms of the settlement, approved by a Jefferson County District Court judge, Bezoni and his businesses will be prohibited from marketing “free” products unless they are, in fact, free and not part of a free-to-pay conversion plan. Bezoni and his businesses also will be barred from enrolling consumers into continuity plans unless the terms of the plan, including the cancellation policy, are clearly and conspicuously disclosed to consumers before they sign up to receive a product and again after the transaction has been completed. Bezoni and his businesses must obtain express authorization from consumers for all charges associated with the initial transaction, including future charges, and they must disclose when those charges will be levied. The agreement requires Bezoni and his businesses to allow consumers to cancel in the same manner that they signed up to receive a sample. The agreement also requires Bezoni and his companies to obtain the express authorization every 12 months from consumers already enrolled in a continuity plan to remain enrolled.
The agreement requires Bezoni and Nutra Pills to pay a $100,000 fine, half of which the Attorney General agreed to suspend for a period of five years barring any violation of the settlement. Bezoni and Nutra Pills must reimburse all consumer complainants who filed complaints since December 2006; and all consumers who requested but were denied refunds since December 2008.