(DES MOINES, Iowa) An Illinois direct marketing company has agreed to refrain from violating Iowa consumer laws and pay $225,000 to the state, in a voluntary agreement with Attorney General Tom Miller.
United Marketing Group (UMG), based in Schaumburg, Illinois, sells “membership programs” through arrangements with third parties via the Internet, direct mail and telemarketing. The programs purport to offer benefits including discounts on merchandise and services to member consumers, who are charged a monthly fee.
Miller alleged to UMG that it was charging Iowans for memberships through their credit cards or through other methods, and consumers were paying for memberships that they did not know they had and did not use. Miller also alleged to the company that it was violating Iowa’s Buying Club Memberships Law, by failing to provide certain notices and disclosures to consumers who were being enrolled in the memberships.
In an Assurance of Voluntary Compliance with Miller, UMG has agreed to refrain from violating Iowa’s Buying Club Memberships Law, which mandates certain notices and disclosures at the point-of-sale. UMG has also agreed to refrain from violating Iowa’s Consumer Fraud Act in connection with its advertising, marketing or sale of any form of membership programs to Iowa consumers. The company has also agreed to:
- Clearly and conspicuously disclose its membership terms and transactions;
- Contact member consumers at least once every nine months to ensure consumers are aware of their membership and associated fees;
- Provide future samples of marketing materials to the Consumer Protection Division before it markets any new membership programs.
As part of the agreement, UMG paid the state $201,250 to repay Iowa consumers amounts they spent for UMG memberships. UMG also paid the state $23,750 for the state’s Consumer Fraud Enforcement Fund. While UMG denies any wrongdoing or liability, it agrees that any violation of this settlement is a violation of Iowa’s Consumer Fraud Act.
Late this week the Consumer Protection Division will notify 3,400 Iowans by mail who were wittingly or unwittingly enrolled as UMG members, and who incurred the highest losses according to company records. These consumers will receive a portion of the membership fees they paid to UMG. Most refunds will be around $50, though some may be somewhat higher, depending on amounts paid and refunds available. This week the Consumer Protection Division will begin notifying eligible Iowans of the settlement by mail, and will mail refunds within a few weeks.
In March a judge ruled that Connecticut-based buying club Vertrue Inc., used deceptive and unfair practices to market memberships to nearly a half-million Iowans, after Miller sued the company. Miller vowed to seek $36 million in restitution for Iowans, which is the amount the company collected from Iowa consumers over the last 20 years. A restitution hearing is scheduled for October in Polk County District Court.
Miller reminds consumers to be aware of so-called “free trial offers.” Consumers should also be wary of being unintentionally enrolled in a “buying club” after completing a purchase through the Internet. Look over your monthly credit card statement, your phone bill and your checking account statements. Dispute any unauthorized charges as soon as possible, in writing. And watch your mail carefully, as some notices of enrollment in a buying club may look like junk mail.
Iowa consumers who enrolled in any buying club and suspect they were taken advantage of should contact the Consumer Protection Division online at firstname.lastname@example.org or by phone at 515-281-5926. Outside the Des Moines area, call toll-free at 888-777-4590.
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