Telemarketer Trilegiant Corp. has agreed to pay $400,000 in restitution and to refund an undetermined amount of money to Florida consumers to settle allegations that it had violated the state’s deceptive trade practices laws, Florida Attorney General Charlie Crist announced on March 19, 2005.
The settlement resolves a four-year-old probe of charges that the company used deceptive sales tactics to enlist people in its discount-buying services. Crist said it was one of the largest recorded settlements involving consumer complaints against a telemarketer.
With more than 1 million accounts in Florida, Trilegiant's overall settlement costs could run into the millions of dollars. The company charged $60 to $90 a year for membership in some 40 clubs, such as Shoppers Advantage, Auto Advantage, and Home Shopping Advantage, which offered price breaks on certain products. Methods of enrollment included complimentary checks for nominal amounts, Internet surveys, and telephone solicitations that would enroll consumers by obtaining personal information without disclosing the purpose of the call.
In addition to the monetary settlement, Trilegiant agreed to abide by certain rules for future telemarketing operations, including clearly stated, up-front disclosures about the conditions of trial offers, and restrictions against credit card charges made without explicit permission from a customer.
Many consumers had complained that they were enticed into signing up for 60-day trial versions of a particular discount-buying service. They said that, after the trial period expired, they were charged full price. Some consumers also said they never signed up, but were charged anyway.
Significance: The telemarketing industry is facing myriad pressures from increased competition due to the Do-Not-Call registry, which has taken some 60 million consumers off telemarketing lists. At the same time, telemarketers must be careful to abide by the many regulations that govern their business, and stay within the bounds of the law or pay the price.