Iowans charged since 1993 through programs marketed by Minneapolis company and two predecessors
(DES MOINES, Iowa) A Minneapolis company will pay $450,000 for refunds to thousands of Iowans enrolled in “membership programs” and charged monthly fees, in a settlement with Attorney General Tom Miller.
The refunds will go to Iowans charged through programs marketed by Sempris LLC or one of its predecessor companies, Damark International Inc. and Provell Inc. The membership programs include Budget Savers, Credit Radar, Essentials for Home, Smart Perks, Rewards, Vacation Passport, Value Access, and Value Plus.
“The roots of this settlement go back two decades,” Miller said. “As early as 1993, our Consumer Protection Division heard from a lot of Iowans who complained that a Minnesota company called Damark charged them for memberships in which they had never intentionally enrolled.”
Settlement Includes Practices by Sempris Predecessors Damark & Provell
According to Miller, Damark was a catalog sales operation that unlawfully enrolled Iowans in memberships through a sub-unit called Provell. When Damark went into bankruptcy in 2002, Provell emerged with the assets, including an ongoing stream of membership payments from many consumers who didn’t realize they were paying monthly credit card charges for memberships. Provell’s assets were then purchased by Sempris in 2011.
The memberships typically began when a consumer made online or telephone contact with some other business for an unrelated reason. The consumer would unexpectedly be offered a free gift card or the like, which was tied to a trial membership. Consumers who accepted the gift card would get enrolled -- whether they knew it or not -- and then years of unwanted credit card charges could follow for those who did not step forward to cancel the membership.
State Law Requires Disclosures
Iowa law requires specific disclosures when consumers purchase buying club memberships, and those disclosures were not made when these enrollments occurred. “If a membership operation follows our law, anyone getting enrolled has clear notice, and won’t be ambushed later by unwanted credit card charges,” Miller said.
Iowa Supreme Court’s Vertrue Ruling Helped Pave Way for Refunds
Miller noted that a July 2013 Iowa Supreme Court ruling in his lawsuit against Vertrue Inc., the now defunct Connecticut-based marketing company, provided the state a powerful tool for seeking refunds for consumers from other operations with a history of complaints.
In the Vertrue case, the Court ordered the company to pay $40 million in restitution and penalties for duping hundreds of thousands of Iowans into signing up for buying club memberships that most consumers did not want or use.
“Consumer Protection Division staff never forgot the host of Iowans who were hurt by Damark, and now, because of the Iowa Supreme Court’s strong decision in the Vertrue case, we’re in a position to return some of those improper membership charges to Iowans,” Miller said.
Miller said that Sempris had already stopped billing Iowa consumers before his office contacted the company last August, following the Vertrue ruling.
The settlement agreement, called an Assurance of Voluntary Compliance, requires Sempris to comply with Iowa's buying club and consumer fraud laws in connection with any future enrollments, in addition to paying $450,000 for refunds to consumers. Miller said that the Consumer Protection Division expects to use the company’s membership records to issue refunds, so consumers don’t need to contact the Consumer Protection Division for a refund.
As part of the agreement, Sempris denies liability. “Sempris has cooperated with our investigation and our efforts to resolve these issues,” Miller noted.
Miller stressed that consumers can best protect themselves by reviewing their credit card and bank statements carefully, and promptly disputing any unauthorized charges.
“Free Trial Offer” & Buying Club Tips
- Be wary of trial offers, “free trial” offers, and membership offers. Get the details and ask questions. 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 credit card bills every month, your checking account and debit card statements, other financial accounts, and phone bills. Watch for unauthorized charges, and dispute them at once, in writing.
- Watch your mail and email for notices that you will be billed unless you cancel. These mailings may look like junk mail or spam.
For more information or to file a complaint, contact the Consumer Protection Division through the Attorney General’s website at www.IowaAttorneyGeneral.gov or email directly to firstname.lastname@example.org. 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.