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Consumer Fraud Settlement Brings $250,000 to Delaware

Consumer Protection | Department of Justice | Department of Justice Press Releases | Fraud | Date Posted: Thursday, October 10, 2013



46 states and DC reach agreements totaling more than $30 million
to resolve charges that companies misled customers 

WILMINGTON – Delaware Attorney General Beau Biden announced today that he and 46 of his colleagues have reached a settlement with a Connecticut-based company and its subsidiaries that tricked customers into signing up and paying for discount clubs and membership.

Affinion and its subsidiaries (Trilegiant and Webloyalty) will pay $250,000 into Delaware’s Consumer Protection Fund under an order Biden’s Consumer Protection Unit filed today in Superior Court. The settlement for all 46 states and the District of Columbia totals $30 million.

“Bad businesses that are not honest with customers and are deceptive will be held accountable,” Biden said.

Affinion and its subsidiaries run multiple discount clubs and membership programs offering a variety of services such as credit monitoring, roadside assistance, and discounted travel.  Affinion markets these programs through a series of agreements with “marketing partners” – well-known banks and retailers that present these programs to consumers often immediately after the consumer has engaged in a transaction with that partner.  Affinion’s programs are marketed via direct mail, online, telemarketing, and in face-to-face point of sale transactions.  Affinion charges a monthly fee to consumers for these services, which continues until the consumers affirmatively cancel.

Consumers complaining to the states have alleged that Affinion charged them for services without consumers’ authorization or knowledge, and, once consumers learned they were being charged, some further had trouble canceling or getting a refund.  Other consumers were confused about who Affinion even was because the offers looked like they came from Affinion’s marketing partners, which usually were banks or retailers with which the consumers did business.

The States’ investigation uncovered several of Affinion’s marketing practices that misled consumers, including a lack of clear and conspicuous disclosure about Affinion’s identity, and the cost and ongoing nature of the charges.

Most troubling were two marketing practices of Affinion – live checks and online data pass.  In a live check solicitation, consumers were sent via direct mail an offer that appeared to be a check – but when consumers endorsed and deposited the checks, the consumers unknowingly authorized Affinion to enroll them in membership programs, and to bill them each month indefinitely.  In an online data pass offer, consumers were presented an Affinion offer immediately after an online purchase from a retailer.  Affinion was then able to enroll and bill consumers without acquiring any of their account information because the marketing partner would pass that information to Affinion.  As part of the judgment, both practices are prohibited.

The settlement includes further changes to Affinion’s business model by requiring Affinion to provide clear and conspicuous information to consumers after enrollment regarding their membership, periodic reminders of their enrollment, and changes to Affinion’s cancellation practices.

The States included in the settlement are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.  The states that led the investigation were California, Texas, Tennessee, Iowa, Vermont, Washington, Oregon, Maine, and Illinois.

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Consumer Fraud Settlement Brings $250,000 to Delaware

Consumer Protection | Department of Justice | Department of Justice Press Releases | Fraud | Date Posted: Thursday, October 10, 2013



46 states and DC reach agreements totaling more than $30 million
to resolve charges that companies misled customers 

WILMINGTON – Delaware Attorney General Beau Biden announced today that he and 46 of his colleagues have reached a settlement with a Connecticut-based company and its subsidiaries that tricked customers into signing up and paying for discount clubs and membership.

Affinion and its subsidiaries (Trilegiant and Webloyalty) will pay $250,000 into Delaware’s Consumer Protection Fund under an order Biden’s Consumer Protection Unit filed today in Superior Court. The settlement for all 46 states and the District of Columbia totals $30 million.

“Bad businesses that are not honest with customers and are deceptive will be held accountable,” Biden said.

Affinion and its subsidiaries run multiple discount clubs and membership programs offering a variety of services such as credit monitoring, roadside assistance, and discounted travel.  Affinion markets these programs through a series of agreements with “marketing partners” – well-known banks and retailers that present these programs to consumers often immediately after the consumer has engaged in a transaction with that partner.  Affinion’s programs are marketed via direct mail, online, telemarketing, and in face-to-face point of sale transactions.  Affinion charges a monthly fee to consumers for these services, which continues until the consumers affirmatively cancel.

Consumers complaining to the states have alleged that Affinion charged them for services without consumers’ authorization or knowledge, and, once consumers learned they were being charged, some further had trouble canceling or getting a refund.  Other consumers were confused about who Affinion even was because the offers looked like they came from Affinion’s marketing partners, which usually were banks or retailers with which the consumers did business.

The States’ investigation uncovered several of Affinion’s marketing practices that misled consumers, including a lack of clear and conspicuous disclosure about Affinion’s identity, and the cost and ongoing nature of the charges.

Most troubling were two marketing practices of Affinion – live checks and online data pass.  In a live check solicitation, consumers were sent via direct mail an offer that appeared to be a check – but when consumers endorsed and deposited the checks, the consumers unknowingly authorized Affinion to enroll them in membership programs, and to bill them each month indefinitely.  In an online data pass offer, consumers were presented an Affinion offer immediately after an online purchase from a retailer.  Affinion was then able to enroll and bill consumers without acquiring any of their account information because the marketing partner would pass that information to Affinion.  As part of the judgment, both practices are prohibited.

The settlement includes further changes to Affinion’s business model by requiring Affinion to provide clear and conspicuous information to consumers after enrollment regarding their membership, periodic reminders of their enrollment, and changes to Affinion’s cancellation practices.

The States included in the settlement are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.  The states that led the investigation were California, Texas, Tennessee, Iowa, Vermont, Washington, Oregon, Maine, and Illinois.

###

image_printPrint

Related Topics:  , , ,


Graphic that represents delaware news on a mobile phone

Keep up to date by receiving a daily digest email, around noon, of current news release posts from state agencies on news.delaware.gov.

Here you can subscribe to future news updates.