Iowa Charges Trilegiant With Consumer Fraud

The State of Iowa has filed a consumer fraud lawsuit against Trilegiant, a major marketer of discount buying clubs that are often sold to consumers through third-party and negative option market arrangements.

Iowa Attorney General Tom Miller, who filed the suit, claims the company unfairly and deceptively charged Iowans for memberships in discount buying clubs or other programs, in many cases without consumers' knowledge.

"We allege that a large number of Iowans were paying monthly fees for so-called memberships that they didn't approve, they didn't use and didn't ever want," said Miller.

According to the lawsuit, Trilegiant, a Delaware Corporation under the Affinion Group, Inc., since at least 2001, enrolled Iowans in "memberships" for programs that offer savings on products and services such as home improvement purchases, health products, and entertainment expenses.

Complaints

Based on an investigation prompted by more than 200 complaints, the lawsuit alleges that many Iowans whose credit cards are charged periodically by the defendants are unaware that they are members of the defendants' buying clubs, and would object to these unwanted and/or unauthorized charges if made aware of them. 

According to the lawsuit, the memberships typically involve an elusive premium used to lure the consumer in, and an allegedly "risk-free" trial period followed by charges to a consumer's credit card, bank account, or other financial account if the consumer fails to cancel. 

Over the years, ConsumerAffairs.com has received numerous complaints about Trilegiant and other buying clubs, like this one from Debra of Columbus, Ohio.

"I looked last week on my bank statement and discovered that i had a recurring charge on my account," Debra told ConsumerAffairs.com. "I went to the bank and they stopped the charges and gave me the number. I never signed up for this service or gave them authorization for them to take money from my account."

Membership club charges may appear under one of more than two dozen names, such as "Buyers Advantage," "Everyday Values," or "Shoppers Advantage."

"Many consumers likely didn't realize what would result from accepting some sort of 'free trial' offer or other types of promotions," said Miller.  "What really happened, we allege, was Iowans paid time and time again for memberships they didn't know they had and never used."

The lawsuit, filed in Polk County District Court, alleges that Trilegiant violated Iowa's Buying Club Memberships Act and Iowa's Consumer Fraud Act.  The lawsuit seeks a civil penalty of up to $40,000 for each separate violation of law, in addition to unspecified monetary judgments. 

The lawsuit also alleges that many Consumer Fraud Act violations were committed against older people and qualify for additional civil penalties provided by Iowa law.

Iowa's Buying Club Memberships law requires covered memberships to be sold through written contracts that expressly notify the customer of a three-day right to cancel, and that require the customer's signature.  Membership buyers also must be provided "Notice of Cancellation forms that they can use to cancel the transaction within three business days, and avoid any obligation.

After Miller filed another buying club case, an Iowa judge ruled in March that Vertrue, Inc. used deceptive and unfair practices to market so-called buying club "memberships to almost a half million Iowans, with revenues exceeding $36 million.  The final remedy, such as restitution and penalties, has yet to be determined.

"Free Trial Offer" is often a trap

According to Miller, here are some ways to avoid unwanted memberships:

• Be wary of "free trial" offers.  Get the details: Will you be billed automatically if you don't cancel?  By when must you cancel?  How do you cancel?  Will you receive a mail notice?  Remember, they already may have your bank or credit card number to charge you.
  
• Examine your credit card bills every month, and also your checking account, other financial accounts, and phone bills.  Watch for unauthorized charges, and dispute them at once, in writing.
  
• Watch your mail and e-mail for notices that you will be billed unless you cancel.  These mailings may look like "junk mail."
  
• Beware of cashing a check that comes in the mail with a "free trial offer."  The fine print may obligate you to future payments.