The Missouri Attorney General recently entered into an enormous settlement resulting from a multi-state investigation involving a marketing company that allegedly engaged in deceptive marketing by enrolling consumers in discount clubs and memberships without their knowledge or consent and billing them on a recurring monthly or yearly basis.

Affinion Group, Inc. and its subsidiaries, Trilegiant Corporation and Webloyalty.com, Inc., allegedly signed up consumers by using a discount, cash-back or other incentive/rebate offer in one of two ways: through “live” check solicitation or through an online “data pass.”

Live Check Solicitation

Affinion allegedly sent consumers a check in the mail for a small sum of money.  If the consumer deposited the check, (s)he became enrolled in a membership program and was automatically billed each month or each year unless and until (s)he canceled the membership.

Online Data Pass

Consumers also allegedly were presented with an Affinion offer immediately after they made an online purchase with certain retailers.  The retailer, who was Affinion’s marketing partner, would pass along the consumer’s account information to Affinion – without the consumer’s consent – and Affinion would enroll and bill the consumer for the Affinion-sponsored program. From the consumer’s perspective, the offer appeared to come through the retailer that the consumer had just made an online purchase from when, in actuality, it came from Affinion.  The offer allegedly contained an inconspicuous disclosure in small print that stated that by accepting the offer, the consumer was authorizing Affinion to bill his or her credit card (or other payment method) for membership in the program.

Consumers were enrolled in the various programs for a free trial period, after which they would be billed on a continuing periodic basis until they affirmatively canceled the program(s).  Recurring monthly fees for the Affinion programs allegedly ranged from $8.00-$15.99, and the recurring annual fees ranged from $49.99-$139.99.

47 State Deceptive Marketing Settlement

As part of the settlement, Affinion agreed to place $19 million in a fund to provide full refunds to consumers from 47 states.  Affinion also agreed to provide clear and conspicuous disclosures to consumers after enrollment, along with periodic reminders of membership. Affinion was barred from using live check solicitations and data pass offers in the future.

This is not the first multi-million dollar settlement relating to Affinion’s allegedly deceptive marketing practices. As we previously reported, the New York Attorney General obtained a large settlement in 2010 on very similar facts.  The U.S. Senate Committee on Commerce, Science, and Transportation also had launched an investigation into Affinion’s business practices in response to an avalanche of complaints alleging that consumers were being enrolled in negative option billing programs without obtaining informed consumer consent.