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August 11, 2016

“Repeat Violator” Buying Club Operation to Pay $300,000 to State, Refund Iowans, and Reform Conduct

Miller: Trilegiant Corporation evaded and broke 2013 commitment to comply with Iowa law, deceived state when confronted with violating agreement

DES MOINES – A Connecticut-based marketing company that has been the target of previous consumer fraud enforcement actions will pay $300,000 to the state, refund Iowa consumers, and stop telemarketing to Iowans after violating a previous agreement to comply with Iowa’s Buying Club Memberships Law.

The consent judgment, filed Thursday in Polk County District Court, follows Trilegiant’s violation of a 2013 “assurance of voluntary compliance” agreement with the Consumer Protection Division, in which the company committed to comply with the law. Among other requirements, the previous agreement compelled the company, when marketing buying club memberships to Iowans, to provide consumers with important disclosures mandated by state law.

Miller: Company Attempted to Evade Previous Agreement through Fraud
According to Attorney General Tom Miller, a telemarketer working on Trilegiant’s behalf attempted to enroll an Iowa resident in the company’s “Great Fun” buying club membership by offering a flight booking discount in exchange for the consumer accepting the free trial membership. However, Miller added, the representative did not provide the required legal disclosures.

Unbeknownst to the company, the consumer is an investigator in the Consumer Protection Division.

“The moment our investigator provided his Iowa address, the telemarketer should have stopped the membership sales pitch because it was missing the required disclosures,” Miller said. “Incredibly, the telemarketer asked the Iowan to come up with a mailing address in another state, to close the unlawful sale under the guise that it was outside of Iowa.”

When the Consumer Protection Division confronted Trilegiant about violating its previous agreement, Miller noted, the company initially claimed it was an isolated mistake and blamed it on one “rogue” telemarketer, which Miller alleges was blatantly false.

A subsequent investigation determined that all four of the telemarketing companies with which Trilegiant had contracted to pitch its memberships repeatedly engaged in the same subterfuge and deception, unlawfully and fraudulently enrolling and charging hundreds of Iowans while making it appear that they lived in other states.

Past State and Federal Enforcement Actions
Trilegiant and its parent company, Affinion, have been the targets of repeated civil law enforcement actions involving nearly all states, and federal authorities, at least since 2005.

In 2013, a consent judgment with 47 states, including Iowa, required Trilegiant to end its abusive practice of sending consumers checks which, if cashed or deposited, automatically enrolled them in a buying club that charged their credit cards indefinitely.

Last year, Affinion was ordered to provide $6.8 million in consumer refunds and pay the Consumer Financial Protection Bureau a $1.9 million penalty, for unfairly charging consumers for credit card add-on benefits they did not receive.

“Because of Trilegiant’s track record of violating consumer laws here and elsewhere, this time our office sought a stringent court order that a judge can enforce through contempt of court sanctions,” Miller said. “In addition, this judgment requires an additional $500,000 payment if the company violates the latest consent judgment over the next three years.”

Company: Refunds Issued to Iowa Consumers
The consent judgment requires Trilegiant to identify and provide refunds to all Iowans drawn into the illegal memberships. The company indicates that it has met that requirement by providing approximately $171,000 in refunds to about 2,500 Iowa consumers.

Membership Buying Club and “Free Trial Offer” Tips
Be wary of membership buying club trial and “free trial” 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.
  • Beware of cashing a check that comes in the mail with a “free trial offer.”  The fine print may obligate you to future payments.

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