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Affinion, GameStop, Avon, Classmates Settle Online Fraud Charges

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By Jason Beahm on August 20, 2010 7:02 AM

It isn't nice to trick people.

New York Attorney General Andrew Cuomo announced that Affinion Group, Inc. and its subsidiary Trilegiant have agreed to an $8 million settlement over allegedly deceiving consumers into signing up for discount clubs that had hidden fees. Five companies included in the settlement allowed Affinion or other marketing companies to use such techniques on their websites. The companies are GameStop, Avon, Classmates.com, FTD Inc., and Budget. They jointly agreed agreed to pay an additional $2 million in refunds and penalties.

Shoppers at Affinion, and other sites using their tactics, would see a message on their websites which indicated that they could receive cash back. The message indicated they only had to click a box and complete their transaction and the cash back would be theirs. However, in actuality, there were disclosures warning the customers that accepting the cash back offer enrolled them in a "club" that included a monthly fee, The Associated Press reports. Many customers did not realize what was happening for months. The charges they would receive were small so they were easy to gloss over, assuming the customer was reviewing their statement at all.

The alleged action constitutes a form of fraud, although one that is difficult to prove. While most of the customers likely did not know that they were signing up for a club with a monthly fee, the information was there, if they read it. Nevertheless, the company faced fraud charges because when a system is set up in a way that most people are unaware that they are agreeing to something, it can still be considered fraud.

Mike Bush, company spokesman for Affinion said that going forward their marketing uses "clear, prominent and unambiguous terms."

According to the settlement, Affinion/Trilegiant must:

  • Fully refund fees charged to consumers who unknowingly enrolled in or authorized billing for Affinion/Trilegiant discount clubs and programs
  • Permanently end its practice of marketing discount clubs and programs by mailing checks to New Yorkers
  • Permanently end its practice of obtaining consumers' billing information from online partner retailers
  • Reform its online marketing practices to ensure consumers understand they are enrolling in a program offered by Affinion/Trilegiant for which they will be billed
  • Make redemption forms for rebates immediately available to consumers online

The Associated Press reports that under the settlement, $5 million will be set aside for a customer restitution fund, as well as $3 million in fines.

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