Seattle – Washington and more than 40 other states have settled a case against a Florida-based telemarketing firm accused of unfair and deceptive practices, Attorney General Christine Gregoire announced today.
As a result of this settlement and a similar one reached between the company and the Federal Trade Commission, more than 6,000 Washington residents could be eligible for restitution.
In papers filed in King County Superior Court, Triad Discount Buying Service, its principals and a variety of affiliated businesses, agreed to institute reforms that will ensure consumers aren’t unfairly charged for memberships in discount buying clubs they never agreed to join.
"Consumers used their credit cards to make one purchase and then ended up paying for club memberships they never agreed to," Gregoire said. "This case illustrates just why consumers need to be concerned about how their personal financial information is used."
According to a complaint filed simultaneously with the settlement, attorneys say the firm offered "trial" memberships to consumers who agreed to buy other products, such as vitamins or magazine subscriptions, from third party telemarketers. The trial memberships were often described as a "thank you" for making the original purchase.
Consumers weren’t told, however, that they had to cancel the trial membership within 30 days to avoid charges. Attorneys allege Triad charged consumers for club memberships, using the credit card information they provided when making their original purchases.
State attorneys also contend the firm:
Failed to tell consumers they would be automatically enrolled and charged for discount club memberships in future years if they didn’t cancel;
Failed to identify themselves -- or the services they sold -- in the first minute of the solicitation, in violation of state law.
Under the terms of the settlement, Triad and its affiliated businesses are prohibited from misrepresenting their services; must obtain consumer authorization for club memberships; must use a third party to independently verify and tape record consumer orders; must stop sharing consumers’ personal financial information with others; and must give clear notice of automatic discount club membership renewals.
The settlement with Triad will require the company to create an $8.3 million restitution pool, which will be available to consumers nationwide. The FTC will administer the program and will receive a list of customers who are entitled to the refunds from Triad.