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December 2, 2008

Florida Telemarketer Pays Full Restitution to Iowans

The Attorney General alleged “Galaxy Member Benefits” deceived Iowans and made unauthorized charges to credit card or bank accounts.

A Florida telemarketing operation called “Galaxy Member Benefits” is making full restitution to 227 Iowans, totaling $12,824, to resolve consumer fraud allegations made by the Attorney General’s Consumer Protection Division. Galaxy also is paying $5,000 to the State.

“Galaxy called Iowans and used deception to entangle victims in unwanted, so-called memberships,” Attorney General Tom Miller said Tuesday. “As a result, many of the Iowans were saddled with unauthorized and unannounced charges to their credit card or bank accounts.”

Miller said his office is mailing refund checks Tuesday to the 227 Iowans. The checks should arrive in one to three days.

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More details and background:

The AG’s Office filed a lawsuit May 19, 2008, naming Galaxy Gadgets and Gizmos LLC of Palm Harbor, FL, doing business as Galaxy Member Benefits, and John E. Bartholomew, Jr.

“Galaxy marketed so-called membership programs to Iowa consumers through telemarketing and by mail,” Miller said. “But Galaxy failed to provide consumers with protections and disclosures required by Iowa law, including written contracts and written notices of cancellation rights.”

Some Iowans reported that their first contact with Galaxy involved a telephone offer of a so-called “government grant” for thousands of dollars. Others said telemarketers claimed to offer $100 worth of free gas. “The offers never panned out,” Miller said.

“Consumers who tried to follow through on the offers found themselves entangled in an unwanted membership,” Miller said. “In some cases, Iowans later discovered unauthorized bank account withdrawals or repeated credit card charges in amounts approaching $300.”

The lawsuit alleged that consumers who contacted Galaxy to get charges removed encountered disconnected numbers, rude treatment, long periods on “hold,” and claims that nothing could be done. Galaxy denied wrongdoing or liability.

Polk County District Court Judge Karen A. Romano entered a Consent Judgment that ordered the consumer restitution totaling $13,000, ordered payment of $5,000 to the State, and specifically prohibited several violations alleged by the Attorney General’s Office.

Examples to illustrate Galaxy’s alleged consumer fraud violations,
as cited by the Attorney General’s lawsuit:

  • A 63-year-old woman from Primghar, Iowa, received telephone calls from Galaxy representatives, but declined any and all offers presented. Nevertheless, she later received a letter indicating that more than $100 had been withdrawn from her bank account by Galaxy. She phoned Galaxy repeatedly but was either disconnected or treated rudely. A promised refund was never received.
  • A Council Bluffs man last year discovered three unauthorized withdrawals from his bank account, in the approximate amounts of $19, $29, and $299. He learned that he was being charged for a Galaxy “membership club.” Working with his bank, he managed to reverse some, but not all, of the unauthorized charges.
  • A 74-year-old Clinton resident received a phone call last year from a Galaxy representative offering him free gasoline. He was asked to provide his credit card number, which he did, only to later discover unauthorized charges.
  • An Aplington resident received a call from a Galaxy representative informing him that he would be receiving a government grant in the amount of $10,000. He was told that the grant would be deposited into his bank account. However, he was instructed to respond “yes” to a series of tape-recorded questions, one of which involved enrolling as a Galaxy member. On the first run-through he said “no” when one of the questions asked if he wished to be a Galaxy member, and so he was again instructed to respond only in the affirmative, and the series of questions was repeated. He later discovered an unauthorized withdrawal of approximately $240 from his bank account by Galaxy, which he managed to have reversed. He never received the promised government grant.


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