| TRENTON
– Attorney General Stuart Rabner today
announced New Jersey’s participation
in a $14.5 million, multi-state settlement
with Chase Bank and Trilegiant Corp. that
resolves allegations the companies deceived
consumers by offering them “free”
trial memberships in programs that, if not
affirmatively canceled by consumers, led
to their automatic, paid enrollment in those
programs.
According to Rabner, the settlement requires
Trilegiant to pay a combined $8.3 million
in restitution to consumers in New Jersey
and the 14 other participating states who
have either already complained to Trilegiant,
complained to their home state’s Attorney
General, or who complain in writing within
the next nine months. An estimated 10 percent
of consumers affected by the questionable
Chase and Trilegiant business practices
live in New Jersey.
In addition to a consumer restitution requirement,
the settlement calls for reforms of Trilegiant’s
and Chase’s business practices. Specifically,
future solicitations must clearly disclose
all terms of any “free trial,”
including when and how the customer will
be billed for any membership, and how to
cancel. Additionally, the settlement forbids
Chase and the Norwalk, Conn.-based Trilegiant
from engaging in deceptive conduct in the
marketing of these membership programs.
At issue in the multi-state investigation
were marketing solicitations by Trilegiant
to Chase customers promoting fee-based programs
such as Buyers Advantage Service that offered
discounts on car and home repair, shopping,
and other goods and services. Chase provided
access to its customers and cooperated with
Trilegiant by reviewing its marketing.
“This
is an important settlement agreement, because
it provides both for the return of money
expended by unwitting consumers, and requires
significant reforms that will protect New
Jersey consumers in the future,” said
Attorney General Rabner.
“When promoting products and services,
businesses have a good-faith responsibility
– as well as a legal duty -- to be
clear with consumers about what they are
getting, and about what obligations they
are being asked to assume,’‘
Rabner added. “We are committed to
ensuring that companies who do business
in New Jersey take that responsibility seriously.”
In addition to New Jersey, Attorneys General
in the following states joined the settlement:
Alaska, California, Connecticut, Illinois,
Iowa, Maine, Michigan, Missouri, North Carolina,
Ohio, Oregon, Pennsylvania, Tennessee, Vermont
and Washington. California took the lead.
In addition to the $8.3 million in restitution,
Trilegiant and Chase will pay $6.1 million
to the participating states to cover civil
penalties, as well as costs and fees related
to the investigation. Trilegiant and Chase
are each paying $75,000 to New Jersey.
The settlement resolves allegations by the
states that Chase and Trilegiant solicited
consumers with offers of “free”
trials in membership programs, but failed
to adequately inform them they would be
charged automatically if they did not affirmatively
cancel within a specified period of time.
The solicitations often included a check
for a small amount of money -- between $2
and $10 -- which consumers often thought
were rebates or rewards. However, by cashing
the checks, consumers agreed to pay for
the membership programs after the trial
offer ended, according to the states. The
states alleged that solicitations were often
included in consumer mortgage or credit
card statements, or in mailings with Chase’s
logo on the envelope and letterhead. This
tactic prevented consumers from realizing
the solicitations were in fact sent by Trilegiant.
If consumers did not affirmatively cancel
their memberships within the required time,
Trilegiant automatically billed the membership
fees to consumers credit cards or loan statements
on either a monthly or yearly basis, depending
on the particular membership program involved,
according to the states. Trilegiant then
charged consumers repeatedly until they
finally cancelled their memberships. Many
consumers belatedly discovered they had
unwittingly purchased memberships in several
different clubs.
The membership programs at issue in the
multi-state investigation included, but
were not limited to, AutoVantage Gold Service,
AutoVantage Service, Buyers Advantage Service,
Complete Home Service, Just for Me, Pet
Privileges Service, Shoppers Advantage Service
and Travelers Advantage Service.
Chase
and Trilegiant entered into agreements under
which Trilegiant gained access to Chase’s
customers for the purpose of marketing the
membership programs, according to the states.
In soliciting Chase customers, Trilegiant
used Chase’s name, and Chase reviewed
and approved marketing materials used by
Trilegiant.
To protect consumers from misleading practices
in the future, the settlement requires that
future solicitations sent by Trilegiant
– or any other company that solicits
Chase customers in a similar manner -- must
clearly disclose all terms of any “free
trial,” including billing details
and how to cancel any membership.
Additionally, the settlement forbids Chase
and Trilegiant from engaging in any deceptive
conduct in marketing membership programs
including identifying the solicitation as
a “reward” or “rebate”
offer.
Consumers who signed up for membership in
a Trilegiant club through any bank or other
company they did business with, and who
were first charged membership fees on or
after July 1, 2001, are eligible to receive
restitution.
Additionally, Trilegiant is required to
send renewal notices to consumers who have
active memberships advising them that they
have purchased the membership and how to
cancel the membership if they wish. If there
are not enough funds to make full restitution
to all consumers who complain, then those
consumers who complain over the next ninth
months will receive a pro rata share. All
consumers who have already complained will
receive full restitution.
Other business-entity parties to the settlement
are Chase Home Finance and TRL Group, Inc.
Consumers who wish to learn if they unknowingly
paid for a membership program should carefully
examine their credit cards or mortgage statements,
or contact the Trilegiant Corp. electronically
via Trilegiant’s Internet Web site
www.trilegiant.com
or by mail at Trilegiant Corp., 100 Connecticut
Avenue, Norwalk, CT 06850, ATTN: K. Buonagurato.
Consumers also should monitor their mail
for any notices from Trilegiant.
Written complaints requesting restitution
for unauthorized charges can be submitted
to the New Jersey Division of Consumer Affairs,
124 Halsey Street, Newark, New Jersey 07102
or online at www.nj.gov/oag/ca/ocp/ocpform.com.
Deputy Attorney General Jennifer Dougherty
handled the Trilegiant/Chase settlement
agreement on behalf of the state.
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