Trilegiant Corporation and Chase Bank settle consumer fraud investigation with 16 states.
Des Moines. Attorney General Tom Miller said today that Trilegiant Corporation and Chase Bank USA have reached an agreement with Iowa and fifteen other states, resolving allegations that the companies deceived consumers into paying for membership programs that supposedly offered discounts on things like car and home repair, shopping, and other goods and services.
The companies together will pay $14.5 million to resolve the matter, including over $8 million from Trilegiant for restitution to consumers nationwide. The companies also must reform their marketing practices under the settlement.
“We alleged that Trilegiant mailed solicitations to consumers with small checks, typically for $2 to $10, that many consumers mistakenly thought were a rebate or some kind of reward,” Miller said. “But cashing the checks committed consumers to a 30-day ‘trial offer’ in some kind of membership program or buying club – and then to monthly or annual charges if they didn’t cancel.”
The states’ investigation found that Trilegiant had agreements with Chase Bank to gain access to Chase’s customers and market the membership programs. Trilegiant used Chase’s name in mailings, and Chase reviewed and approved marketing materials, the states alleged.
Trilegiant will pay $8.325 million for consumer restitution nationwide. Consumers will be eligible if they already have complained to Trilegiant or their state Attorney General, or if they file a complaint in the next nine months. Trilegiant and Chase also together will pay $6.175 million to the sixteen states. The State of Iowa will receive $477,128 from Trilegiant and $175,000 from Chase to be used for future consumer fraud investigations, lawsuits and education.
Miller advised consumers to examine credit card and mortgage statements for any billing notices from Trilegiant Corporation of Norwalk, CT, and to watch for mail from Trilegiant that might include notices of memberships and how to cancel. [See more details below about filing consumer complaints and claims for a refund.]
Consumers have been billed for annual membership fees ranging from $69.99 to $119.99, or monthly membership fees ranging from $6.99 to $9.99, depending on the particular program. If consumers didn’t cancel the “free-trial-offer,” fees were billed to credit card or loan statements.
Membership programs went by various names, including AutoVantage Gold Service, AutoVantage Service, Buyers Advantage Service, CompleteHome Service, Just for Me, Pet Privileges Service, Shoppers Advantage Service, and Travelers Advantage Service.
The Iowa Attorney General’s Office has received around 79 complaints about the various solicitations since July 1, 2001, but far more Iowans may have complained directly to the companies – or may not have noticed the unwanted billings at all. Complaints range from under $10 to over $800. Miller said many Iowans already had received refunds after filing complaints with his office. He estimated that Iowans might receive an additional $200,000-300,000 under the settlement.
Consumers who signed up for membership in a Trilegiant club through any bank or other company they did business with, and who were first charged membership fees on or after July 1, 2001, are eligible to receive restitution. All consumers who have complained already will receive full restitution. Trilegiant also must send renewal notices to consumers who have active memberships, advising them that they have purchased the membership, and how to cancel the membership, if they wish. If there are not enough funds to make full restitution to all consumers who complain, then consumers who complain over the next ninth months will get a pro-rata share. (Restitution is not limited to Chase Bank and Chase Home Finance customers, but applies to all consumers who paid money to Trilegiant for memberships.)
Consumers who are trying to find out if they unknowingly paid for a membership program should carefully examine their credit card or mortgage statements and also should monitor their mail for any notices from Trilegiant. Consumers also can also contact Trilegiant electronically via Trilegiant’s Internet website, www.trilegiant.com or by mail at Trilegiant Corporation, 100 Connecticut Avenue, Norwalk, CT 06850 (Attention: K. Buonagurato.)
Written complaints requesting restitution for unauthorized charges also can be submitted to the Iowa Attorney General’s Office by writing to: Consumer Protection Division, 1305 E. Walnut Street, Des Moines, IA 50319, or by sending e-mail to: firstname.lastname@example.org.
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Tips for Consumers to Avoid Buying-Club Membership Scams or Problems:
Miller provided advice to consumers to avoid being charged unexpectedly for memberships in buying clubs and similar plans, and incurring ongoing charges:
- Be very wary of “free trial” offers that may result in charges if you don’t cancel within the trial period.
- Be very wary of checks that accompany solicitations. Cashing them usually results in charges to consumers’ credit cards or checking accounts.
- If you do accept a “free trial” offer, watch carefully for the “confirmation” mailing that comes later and tells how the plan works and how you can cancel.
- Carefully review all credit card bills and mortgage statements each month to make sure all charges were authorized and expected. Consumers who find an unauthorized or unknown charge should call and write their credit card or mortgage company and challenge the charge -- and file a complaint with the Iowa Attorney General’s Consumer Protection Division by calling 515-281-5926 or 888-777-4590 (toll-free), or by sending e-mail to: email@example.com.
More Background and Details on the Trilegiant and Chase Settlements:
Miller’s Office helped lead settlement negotiations. Attorneys General in the following states joined the settlement with Trilegiant: AK, CA, CT, IL, IA, ME, MI, MO, NJ, NC, OH, OR, PA, TN, VT, and WA. (All those states but Ohio also settled with Chase.) In Iowa, the Attorney General’s Consumer Protection Division simultaneously filed a lawsuit Monday against Trilegiant Corporation and a Consent Judgment, or settlement, in Polk County District Court. The Chase Bank settlement was through an Assurance of Voluntary Compliance, which limits what the bank can do in future mailings made by business partners, including Trilegiant.
According to the states’ investigation, solicitations often were included in consumers’ mortgage or credit card statements, or in mailings with Chase’s logo on the envelope and letterhead. This tactic prevented consumers from realizing the solicitations were in fact sent by Trilegiant.
The states alleged that many consumers belatedly discovered they had unwittingly purchased memberships in several different clubs. Consumers reported that they didn’t understand their credit card accounts could be charged because they were not asked to disclose their credit card numbers in order to cash the checks that came with the mail solicitations. Trilegiant had obtained access to charge consumers’ accounts from Chase or other business partners.
The settlement requires reforms of Trilegiant’s and Chase’s business practices in order to protect consumers from unlawful deception in the future. Future solicitations sent by Trilegiant, or any other company that solicits Chase customers in a similar manner, must clearly disclose all terms of any “free trial,” including when and how the customer will be billed for any membership, and how to cancel a membership.
The settlement also forbids Chase and Trilegiant from engaging in any deceptive conduct in marketing membership programs. Prohibited practices include misrepresenting a solicitation as a “reward” or “rebate” offer, or misrepresenting that any check or other premium offered as part of a solicitation is anything other than a benefit or incentive for the purchase of a membership.
Miller said the Trilegiant-Chase settlement is part of his office’s ongoing effort to address alleged consumer fraud concerning “free trial” offers for membership buying clubs that result in charges if consumers don’t cancel. The effort includes prior settlements with US Bankcorp, Citibank, Triad Discount Buying Club, and a pending civil lawsuit against Vertrue Corporation.