"Triad" Defendant Settles Federal Charges

WASHINGTON, April 10, 2002 -- Richard Kaylor, an officer of Triad Discount Buying Service and numerous related companies agreed to settle Federal Trade Commission charges that he misled consumers into accepting discount buying club memberships and deceptively obtained consumers' billing information through telemarketers without the consumers' knowledge or authorization.

The settlement would require that Kaylor post a $1 million bond before engaging in any telemarketing or any sales involving negative options. He would also be required to pay $137,500 for consumer redress.

In October 2001, the FTC and numerous state Attorneys General filed complaints in federal and state courts against a group of buying clubs including Triad Discount Buying Service, Inc. of Boca Raton, Florida, its related companies, and their operator, Ira Smolev.

The FTC complaint and some of the state complaints also named two officers, including Kaylor. In its complaint, the FTC charged the Triad companies with deceptively signing up buying club members through more than 100 telemarketers, deceptively obtaining consumers' credit card numbers through telemarketers without the consumers' knowledge or authorization, and placing unauthorized charges on those credit cards.

According to the FTC, the defendants contracted with over 100 telemarketing firms selling their own products. After consumers called the telemarketers to order such products as kitchen gadgets or diet pills and provided their credit card information, the telemarketers pitched a 30 day "no obligation" free trial in Triad's buying club.

The FTC alleged that if the consumers agreed to the free trial, and in some instances even if they did not agree, their names and credit card information were transferred to the Triad companies, which charged membership fees to the consumers' credit cards without their knowledge or authorization unless they had called to cancel.

According to the FTC's complaint, Triad's scripts did not adequately disclose that the consumers' credit card numbers would be turned over to a third party, Triad, or that Triad would charge consumers if they did not cancel their membership within the 30 day period.

The scripts also failed, according to the complaint, to disclose or to disclose adequately that in following years, consumers' credit cards would be charged annual renewal fees, unless consumers cancelled.

Ira Smolev and the Triad companies agreed to pay more than $9 million to settle charges brought by the FTC and the state Attorneys General. Under that agreement, approximately 275,000 consumers who filed complaints against the Triad companies nationwide may be eligible for partial membership refunds from a consumer restitution fund. Kaylor's payment will be added to the restitution fund.

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