Department of Law Announces Settlement Over Deceptive "Free" Offers
December 12, 2006
(ANCHORAGE, AK) – Acting Attorney General Craig Tillery today announced a $14.5 million, 16-state settlement with Chase Bank and Trilegiant Corp. that will resolve allegations the companies unlawfully deceived consumers into paying for membership programs that purportedly provided discounts on car and home repair, shopping, and other goods and services.
The settlement requires Trilegiant to pay a combined $8.325 million in restitution to all consumers in Alaska and the other 15 states who either have already complained to Trilegiant or their Attorney General, or who complain in writing within the next nine months. Of the states who settled with Trilegiant and Chase, approximately 1% percent of the consumers charged for memberships live in Alaska.
Trilegiant and Chase also will pay $6.175 million to the settling states to cover civil penalties and recoupment of costs and fees. Trilegiant and Chase are each paying $75,000 to the State of Alaska.
The settlement resolves claims by the Attorney General that Chase and Trilegiant solicited consumers with offers of "free" trials in membership programs, without adequately informing consumers they would be charged automatically if they did not affirmatively cancel within a specified period of time.
The solicitations often included a check for a small amount of money, between $2 and $10, which consumers often thought were rebates or rewards. However, by cashing the check, the consumer purportedly agreed to pay for the membership program after the trial offer ended, according to the complaint. The solicitations were often included in the consumers' mortgage or credit card statements, the complaint alleged, or in mailings with Chase's logo on the envelope and letterhead. This tactic prevented consumers from realizing the solicitations were in fact sent by Trilegiant.
If consumers did not affirmatively cancel within the required time, Trilegiant automatically billed the membership fees to consumers' credit card or loan statement on either a monthly or yearly basis, depending on the particular membership program, according to the complaint. Trilegiant then charged consumers repeatedly until they finally cancelled their membership. Many consumers belatedly discovered they had unwittingly purchased memberships in several different clubs, the complaint alleged.
The membership programs include, but are not limited to, AutoVantage Gold Service, AutoVantage Service, Buyers Advantage Service, CompleteHome Service, Just for Me, Pet Privileges Service, Shoppers Advantage Service, Travelers Advantage Service, sometimes known as Chase Travelers Advantage, and National Home Protection Alliance.
Regarding Chase's role in the alleged unlawful business practices, Chase and Trilegiant entered agreements under which Trilegiant gained access to Chase's customers for the purpose of marketing the membership program and Trilegiant used Chase's name in its solicitations.
To protect consumers from unlawful deception in the future, the settlement requires reforms of Trilegiant's and Chase's business practices. Future solicitations sent by Trilegiant, or any other company that solicits Chase customers in a similar manner, must clearly disclose all terms of any "free trial," including when and how the customer will be billed for any membership, and how to cancel a membership. Additionally, the settlement forbids Chase and Trilegiant from engaging in any deceptive conduct in the marketing of these membership programs. The prohibited practices include identifying the solicitation as a "reward" or "rebate" offer, or that any check or other premium offered as part of a solicitation is anything other than a benefit or incentive for the purchase of a membership.
Consumers who signed up for membership in a Trilegiant club through any bank or other company they did business with and who were first charged membership fees on or after July 1, 2001 are eligible to receive restitution. Additionally, Trilegiant is required to send renewal notices to consumers who have active memberships advising them that they have purchased the membership and how to cancel the membership if they wish. If there are not enough funds to make full restitution to all consumers who complain, then those consumers who complain over the next ninth months will get a pro rata share. All consumers who have already complained will receive full restitution.
In addition to Alaska, the Attorneys General in the following states joined the settlement: California, Connecticut, Illinois, Iowa, Maine, Michigan, Missouri, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Vermont and Washington. Louisiana also announced a settlement with Trilegiant.
Other business-entity parties to the settlement are Chase Home Finance and TRL Group, Inc (the predecessor in interest to Trilegiant).
Consumers who are trying to find out if they unknowingly paid for a membership program should carefully examine their credit card or mortgage statements and also should monitor their mail for any notices from Trilegiant. They can also contract Trilegiant electronically via Trilegiant's internet website, www.trilegiant.com or by mail at Trilegiant Corporation, 100 Connecticut Avenue, Norwalk, CT 06850, ATTN: K. Buonagurato. Written complaints requesting restitution for unauthorized charges can be submitted to the Attorney General's Office at 1031 W. 4th Avenue, Suite 200, Anchorage, AK 99501, Attention: Trilegiant/Chase settlement.
Also, consumers are urged to monitor their credit card and mortgage statements each month to check for unauthorized or disputed charges, including but not limited to charges for membership clubs such as the membership programs offered by Trilegiant. Consumers who see an unauthorized charge should call and write their credit card or mortgage company and also file a complaint with the Attorney General's office.
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