Internet Order to pay back over $1 million to consumers; Consumers encouraged to file a claim
SEATTLE — Washington State Attorney General Bob Ferguson announced resolution of a consumer protection enforcement action today against the company Internet Order and its CEO Daniel Roitman for unfair and deceptive practices. The Philadelphia-based online company was accused of using deceptive “negative option” marketing tactics to lure consumers into purchasing language instruction courses in violation of the federal Restore Online Shoppers’ Confidence Act (ROSCA) and the state’s Consumer Protection Act (CPA).
“Consumers have a right to know exactly what they’re purchasing and how much it will cost them,” said Ferguson. “If businesses deceive consumers and use unfair business tactics to make a profit off of Washington residents, I will hold them accountable.”
Internet Order markets and sells foreign language audio courses online under the brand name “Pimsleur Approach,” primarily via their website www.pimsleurapproach.com. Internet Order’s website and marketing promote the “Quick and Simple Course” with a low price “introductory offer” on a set of self-instruction CDs for “only $9.95.”
The “Pimsleur Approach” marketed by Internet Order is to be distinguished from other Pimsleur products sold by other retailers.
The lawsuit alleged that consumers who purchased the introductory set for $9.95 were unknowingly and automatically enrolled in a “negative option” purchase plan that obligated them to receive up to four advanced-level additional courses at a cost of $256 each for a total of as much as $1,024.
In order to avoid charges, consumers were required to ship the advanced-level courses back to the company at their own expense within 30 days. If they failed to do so, they were automatically charged $256 on the credit card they had used to purchase the introductory “Quick and Simple Course.” To make matters worse, the suit alleged that consumers who refused to pay were hounded with letters and threatened with collection agency action.
Internet Order was accused of:
Failing to clearly disclose the terms of its negative option sales program.
Failing to obtain agreement from consumers to sign up for the program.
Failing to provide simple cancellation mechanisms as required by law.
Making misrepresentations in its advertising.
Using unfair collection practices.
These are violations of the federal ROSCA and the state’s CPA.
Internet Order must stop deceptive business practices
The action announced today is part of a multistate effort with the Attorneys General of Pennsylvania and New York.
Under terms of the enforcement action, Internet Order:
Must clearly disclose the terms of any negative option sale, and must get consent from consumers before obligating them to the terms of the sale.
Must repeatedly notify consumers of the terms of a sale.
Must allow consumers to easily and effectively cancel an ongoing subscription in a negative option plan.
Cannot charge any fee for the return of an item during a “free trial” period.
The enforcement action requires Internet Order to pay back over $1 million in restitution to consumers nationwide who were victims of its scheme.
Finally, Internet Order must pay the states of Washington, Pennsylvania and New York $288,000 of any future profits made from Pimsleur Language Learning sales made between July 2016 and June 2019. Washington’s share of this potential amount, $96,000, will help cover the costs of enforcing the Consumer Protection Act on behalf of Washington consumers.
Consumers encouraged to file a claim for restitution
Consumers who purchased language courses from Internet Order and believe they are victims should file a complaint with the Washington Attorney General’s Office at www.atg.wa.gov/file-complaint. If you have already filed a complaint, you do not need to file a new one.
Senior Counsel Paula Selis and Assistant Attorney General Patricio Marquez were leads on the case for Washington state.
The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.
Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.gov