Conn.-Based Company Pays $40,000; Refunds Available for Eligible Consumers Claiming Unauthorized Charges

Pennsylvania Attorney General Jerry Pappert’s Bureau of Consumer Protection announced that a Connecticut-based company, which markets membership programs to consumers, will pay $40,000 to the Commonwealth as part of a settlement to resolve allegations that Pennsylvanians’ credit cards or bank accounts were charged service fees without their knowledge or authorization.

The company has fully refunded more than 200 consumers who filed complaints with the Bureau disputing the charges. As part of the settlement, the business will issue refunds to those who come forward with claims that they were unknowingly billed.

Pappert said his office has entered into an “Assurance of Voluntary Compliance” agreement with MemberWorks Inc., 680 Washington of Stamford, Conn., to resolve concerns of possible violations of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, Telemarketer Registration Act and federal Telemarketing Sales Rule.

According to investigators, the company uses telemarketing and direct mail solicitations to promote and sell various membership programs and services to consumers that ranged between $99 and $199.

Some of the membership programs were marketed under the following names: Countrywide Dental & Health; Countrywide Dental; HealthMAX Advantage; Health Trends; Travel Arrangements; Connections; CardMember Protection Service; 24Protect; SmartSource; Leisure Advantage; Essentials; ValueMax Shopping Service; MoneyMaster; Privacy Plus; RateSaver; Home & Garden Rewards; Home Works; Personal Gains; BusinessMax; The Market Plaza; First Fun; Premiere Health; Galleria, and WWF X-Perience.

The Commonwealth claims that nearly all of the programs were marketed using negative option trial offers. Under these offers, consumers for a limited time try out a service at no cost and must cancel or reject the contract within the trial period or be automatically billed for the membership fees. In addition, unless consumers act on their own to cancel the memberships, the renewal fees are automatically billed to their credit or debit cards.

“Many consumers complained to my office that the terms of the trial offers and renewal process were not properly disclosed,” Pappert said. “This agreement not only reimburses consumers who were totally unaware of their participation in these programs but changes for good the way these memberships are marketed and in the future.”

Pappert said MemberWorks cooperated in the investigation and without admitting any wrongdoing agree to:

* Credit or refund disputed charges brought by consumers who come forward with complaints that they were unknowingly billed for membership programs.

* Clearly and conspicuously disclose the fees, terms and conditions associated with trial offers and renewals of membership contracts.

* Clearly and conspicuously disclose the name of each seller offering the membership program.

* Truthfully disclose the exact benefits, discounts, rebates or other free offers or inducements associated with the programs or services.

* Obtain the expressed verifiable consent of consumers prior to billing their accounts for memberships fees. Verifiable consent can be obtained in writing or by use of an audio-taped verification system. Proof of consent must be maintained for a two-year period.

* Clearly and conspicuously disclose that consumers’ accounts will be billed if they do not cancel within the trial period and provide a toll-free number to cancel memberships.

* Cease using the term “free” to describe incentive offers that include costs.

* Inform consumers in writing regarding renewal policies and send via mail an annual renewal notice containing the following: “IMPORTANT INFORMATION CONCERNING AN UPCOMING CHARGE FOR YOUR PROGRAM RENEWAL.” – Fully comply with Pennsylvania’s Consumer Protection Law, Telemarketer Registration Act and federal Telemarketing Sales Rule and require third party vendor or telemarketers to do the same.

* Pay $40,000 to the Commonwealth to be used for investigation costs or other public protection purposes.