Missouri Sues Consumers Trust

February 23, 2005
Consumers Trust, a promotion scheme that promises consumers rebates -- yet makes the qualifications almost impossible for the consumers to meet -- violates Missouri law against misleading and deceptive practices, Attorney General Jay Nixon charges in a lawsuit.

Nixon is suing to stop the "cashable voucher program," which is being marketed by a Kansas City-area business and operated out of England. He has obtained a court order freezing approximately $10 million in two Missouri bank accounts held by the defendants.

Nixon said consumers nationwide have bought items such as cars, hot tubs, carpeting, swimming pools and even cosmetic surgery in the hopes of getting a rebate for the full or a significant portion of the purchase price after three years.

Those hopes are being dashed, Nixon said, when the claims are rejected by Consumers Trust, which operates the cashable voucher program. The scheme is marketed to merchants in Missouri and other states by Consumer Promotions Inc., of Lee's Summit, Mo. Both organizations are defendants in Nixon's lawsuit.

"The whole program is set up to frustrate claims, pure and simple," Nixon said at a news conference in Kansas City. "The wording in the rules is intentionally vague, and consumers have had their claims arbitrarily rejected, without any recourse.

In some cases after the three years are up, the consumers even have been told there is not enough money to immediately satisfy their particular claim. This scheme violates the law and needs to come to halt right now."

Nixon explained how the scheme works: Consumer Promotions markets the voucher program to merchants as a way to increase sales. The program induces consumers to make purchases -- often for expensive items or services -- with the promise that the consumers will get the full face value of the voucher in three years.

Merchants pay 15 percent of the voucher value to Consumers Trust and are told that the money will be held exclusively for the payment of consumer claims. Consumers Promotions convinces the merchants that the voucher program is fair and that consumers who make valid claims will be paid.

In reality, the money paid by the merchants is not held for the payment of consumer claims; most of it is wired to international bank accounts owned by the various defendants named in Nixon's lawsuit, he said.

What Consumer Promotions and the Consumers Trust fail to inform consumers and merchants, Nixon said, is that the terms of compliance for making claims are extremely vague, intimidating and cumbersome - virtually ensuring that consumers' claims will be rejected.

For instance, consumers are told to submit "third-party proof of payment," but that term is never defined for them. One consumer who complained to Nixon's office submitted a photocopy of the receipt from the merchant showing she had paid for the item in full, yet her claim was rejected.

One of the more onerous terms of the voucher warns consumers that their vouchers will be invalidated if anyone reminds them to file a claim or assists them with the claims process.

"Hundreds of consumers in Missouri and elsewhere are being induced to make purchases by the promise of a full rebate, but they eventually find out the fine print puts significant hurdles in the way of getting the rebate," Nixon said. "When the purpose of a promotional program is to frustrate consumers, that's not a promotion - that's a fraud."

In addition to obtaining the asset freeze, Nixon is asking the Jackson County Circuit Court to order that Consumer Trust and Consumer Promotions immediately cease violating Missouri consumer protection laws.

He also is seeking a court order to pay restitution to all consumers affected, a civil penalty of $1,000 per violation and 10 percent of total restitution, and to reimburse the state for legal and investigative costs. Nixon also is asking the court to appoint a receiver to safeguard the assets and provide for their disbursal to consumers.

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