Indiana, other states announce $30 million judgment against negative option marketer

Affinion settles allegations of deceptive advertising and enrollment in discount clubs and memberships

INDIANAPOLIS – Indiana Attorney General Greg Zoeller and 47 other state attorneys general announced today that Connecticut-based Affinion, and its subsidiaries Trilegiant and Webloyalty, will pay more than $30 million to settle allegations that they misled consumers into signing up and paying for discount clubs and membership.

Zoeller said more than 3,700 Indiana customers are eligible to receive refunds from more than $238,900 in settlement monies.

Affinion and its subsidiaries operate multiple discount clubs and membership programs offering a variety of services such as credit monitoring, roadside assistance, and discounted travel. Affinion markets these programs through a series of agreements with “marketing partners” – well-known banks and retailers that present these programs to consumers often immediately after the consumer has engaged in a transaction with that partner. Affinion’s programs are marketed via direct mail, online, telemarketing, and in face-to-face point of sale transactions.  Affinion charges a monthly fee to consumers for these services, which continues until the consumers affirmatively cancel.

“Consumers have alleged that Affinion charged them for services without their authorization or knowledge, and, once consumers learned they were being charged, some had trouble canceling or getting a refund,” Zoeller said.  “Today’s agreement highlights the importance of states working together to ensure consumers are treated fairly and are appropriately refunded.”

Zoeller said other consumers were confused about what Affinion was because the offers looked like they came from Affinion’s marketing partners, which usually were banks or retailers with which the consumers did business.

The states’ investigation uncovered several of Affinion’s marketing practices that misled consumers, including a lack of clear and conspicuous disclosure about the company’s identity, and the cost and ongoing nature of the charges.  Most troubling were two marketing practices of Affinion – live checks and online data pass.  In a live check solicitation, consumers were sent via direct mail an offer that appeared to be a check – but when consumers endorsed and deposited the checks, the consumers unknowingly authorized Affinion to enroll them in membership programs, and to bill them each month indefinitely.  In an online data pass offer, consumers were presented an Affinion offer immediately after an online purchase from a retailer.  Affinion was then able to enroll and bill consumers without acquiring any of their account information because the marketing partner would pass that information to Affinion.  As part of today’s judgment, both practices are prohibited.

Today’s agreement includes further changes to Affinion’s business model by requiring the company to provide clear and conspicuous information to consumers after enrollment regarding their membership, periodic reminders of their enrollment, and changes to Affinion’s cancellation practices.

Affinion is establishing a fund of about $19 million to provide refunds to some consumers who received unauthorized charges for Affinion’s programs. Consumers who believe they were improperly charged by Affinion, Trilegiant or Webloyalty should file a consumer complaint by Feb. 14, 2014 by visitingwww.IndianaConsumer.com.  Consumers checking their credit card and bank account statements should also be looking for the names of Affinion’s membership programs, as often that is how the company’s charges appear on their bills.  A complete list of Affinion’s membership programs is attached.

The other states included in the settlement are Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.