Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Multistate settlement reached over allegedly misleading advertising by discount club, (Oct 14, 2013)

By Jody Coultas, J.D.

Affinion Group, Inc. and its subsidiaries have settled claims filed by 47 states and the District of Columbia that it misled consumers into signing up and paying for discount clubs and memberships. The settlement was filed on October 10 in Superior Court in Hartford, Connecticut, and is not final until it receives the court’s approval (Connecticut v. Affinion Group, Inc., HHD-CV-13-604911-S).

The companies ran multiple discount clubs and membership programs that offered a variety of services, including credit monitoring, roadside assistance, and discounted travel. Well-known banks and retailers offered the programs to consumers, often immediately after the consumer had engaged in a transaction with that bank or retailer. Affinion then charged consumers a monthly fee for the programs until the consumer affirmatively canceled the membership. Consumers complained that they were charged without authorization or knowledge, and that it was difficult to cancel or get a refund.

Affinion allegedly used live checks and conducted online data pass offers. In a live check solicitation, consumers were sent an offer that included a check. When consumers endorsed and deposited the checks, the consumers unknowingly authorized enrollment in one of the companies’ programs. Online data pass offers presented an offer from one of the companies immediately after an online purchase from a retailer, allowing the company to enroll and bill consumers when its marketing partner provided account information.

The settlement requires Affinion and its subsidiaries to establish a fund of approximately $19 million to provide refunds to some consumers who received unauthorized charges for their programs. The states will also receive additional money for public production and education purposes. The settlement also prohibits Affinion from engaging in live checks and online data pass offers. Affinion must also provide clear and conspicuous information to consumers after enrollment regarding the membership and opportunities to cancel.

This was not the first time Affinion’s use of life checks was questioned. In 2010, Affinion was asked by Congress about its use of live checks to enroll customers in membership programs.

Companies: Affinion Group, Inc.

News: Advertising