Consumers who thought they were getting a free trial of dietary supplements or teeth whitening products, only to find their credit cards charged for additional products, are getting $3 million in refunds. The company has agreed to settle deceptive marketing charges.
Just over a year ago, the Florida Attorney General’s Economic Crimes Division began investigating Florida-based XM Brands, a marketer of non-prescription dietary aids, nutritional supplements, teeth-whitening, and other products.
The investigation was triggered by complaints from consumers, who said they received and were billed for products they did not order. The investigation revealed that acceptance of XM’s trial product offer triggered a negative option agreement which imposed automatic monthly shipments and reoccurring costs associated with receiving the trial products.
Sold on the internet
The products were advertised on the Internet, offering consumers a free trial. However, to receive the free product, consumers had to provide credit card information to pay a $2 to $4 shipping fee. Once the company had he credit card information, consumers complained they were subjected to automatic subscription renewals, and automatic shipments.
Florida's newly sworn-in Attorney General Pam Bondi said XM Brands and its directors have fully cooperated with the Attorney General’s Office and have already reimbursed or assisted in the reimbursement of approximately $3 million to consumers nationwide. Consumers who have not yet been reimbursed, have until April 29, 2011 to file a claim with the Attorney General’s Office.
As part of the settlement, refunds will be offered to Florida consumers who were enrolled in a trial offer, automatic renewal or automatic shipment plan online. In addition to consumer refunds, the companies will pay approximately $51,000 to the Attorney General’s Office for attorneys' fees and costs and for future investigation and enforcement.
XM agrees to advertise in a way that clearly and conspicuously tells consumers about the terms and conditions of its plans and ensures that consumers have agreed to automatic renewals and automatic shipments before enrolling them in such programs.