(DES MOINES, Iowa) The company that owns freeshipping.com will stop selling memberships to Iowans and will pay $154,126 for full or partial refunds to Iowa consumers after Attorney General Tom Miller accused the company of violating the Iowa Consumer Fraud Act and Iowa’s Buying Club Memberships Law.
In an agreement called an Assurance of Voluntary Compliance (AVC) that took effect Wednesday, the company, Clarus Marketing Group, based in Middletown, Connecticut, denies wrongdoing or liability, but agrees to resolve Miller’s claims by ceasing to enroll and charge Iowa residents.
Freeshipping.com enrolls consumers by offering a free shipping coupon after the consumer completes a transaction on another business’s website, like Walmart.com, Target.com, or BestBuy.com. Under this post-transaction marketing arrangement, Clarus enrolls the consumer in a monthly membership program, or buying club, and charges the consumer’s credit or debit card from approximately $8-$15 in monthly fees.
“Consumers may think they’re taking advantage of a one-time, free shipping promotion, not realizing they’re enrolling in a buying club,” said Miller. “So they often end up paying ongoing monthly charges for a membership that they don’t know they have and don’t use.”
Clarus has agreed to provide customer payment information that will allow the Consumer Protection Division to contact consumers and provide partial or full refunds under the settlement.
Miller noted that the underlying problem of charges that consumers did not knowingly authorize impacts many Iowans. “What we find time after time is that consumers get enrolled in memberships when they’re shopping online, and then unwanted charges start appearing on their credit or debit cards,” Miller said. “We use Iowa laws to prevent or stop improper ‘stealth’ marketing whenever possible, but consumers also need to protect themselves by being on the lookout for unauthorized charges.”
Tips for Avoiding Unwanted Membership Charges
- Be wary of “free trial” offers and read the fine print. Will you be billed automatically if you don’t cancel? By when must you cancel? How do you cancel? Will you receive a mail notice? Remember, they already may have your bank or credit card number to charge you.
- Examine your monthly credit card bills, and also your checking account, other financial accounts, and even phone bills. Watch for unauthorized charges, and dispute them at once, in writing.
- Watch your mail and e-mail for notices that you will be billed unless you cancel. These mailings may look like junk mail or “spam.”
- Beware of cashing a check that comes in the mail with a “free trial” offer. The fine print may try to obligate you to future payments if you cash or deposit the check.
For more information or to file a complaint, contact the Attorney General’s Consumer Protection Division through the Attorney General’s website at www.IowaAttorneyGeneral.gov or e-mail directly at email@example.com. Consumers can also call the Consumer Protection Division at 515-281-5926, or outside the Des Moines area, toll free, at 1-888-777-4590.
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