DES MOINES — Iowa consumers are in line to receive more than $5 million in refunds as part of a settlement with a Connecticut-based marketer that was accused of misleading them into paying for discount club and membership programs through “supposed free trials.”
Iowa Attorney General Tom Miller said the payments are part of an agreement with Affinion Groups Inc., a discount membership club operator, and its subsidiaries, Trilegiant Corp. and Webloyalty.com Inc. Iowa’s overall settlement was $6.2 million as part of a $30 million agreement with 47 states and the District of Columbia covered by a court order concerning general consumer fraud issues.
A separate written agreement with the Iowa Consumer Protection Division settles the state’s claims against the company for violating Iowa’s Membership Buying Club law, Miller said.
“The separate agreement we reached with the company requires drastic improvements to how the company markets memberships to Iowans,” Miller told a news conference. “It also channels $5 million into a special restitution fund for Iowa consumers, which we expect to use to provide substantial relief to every Iowa victim of Affinion’s unlawful conduct.”
Affinion and its subsidiaries run multiple discount clubs and membership programs offering a variety of services, such as credit monitoring, roadside assistance and discounted travel, Miller said. The companies sell the programs through a series of agreements with “marketing partners,” he added, including prominent banks and retailers. Affinion charges a monthly fee to consumers for the services that continue until the consumers affirmatively cancel.
According to court documents, consumers claimed Affinion charged them for services without their authorization or knowledge. The consumers didn’t realize they were paying monthly discount club or membership fees as a result of an unrelated transaction or special offer.
Miller said consumers also complained of problems canceling or obtaining refunds once they discovered the charges.
The agreement announced Thursday prohibits practices the marketers used to mislead consumers and forces Affinion to change its business model by requiring the company to provide clear and conspicuous information to consumers after enrollment regarding their memberships, periodic reminders of their enrollments and changes to Affinion’s cancellation practices.
Affinion is establishing a national fund of $19 million to provide refunds to some consumers who received unauthorized charges for Affinion’s programs. Iowans who believe Affinion, Trilegiant or Webloyalty.com owe them refunds because they improperly charged them can file consumer complaints at www.IowaAttorneyGeneral.gov or by calling 515-281-5926 or 1-888-777-4590 toll-free.
Illinois also was part of the national settlement, according to a news release from Illinois Attorney General Lisa Madigan's office.
The separate assurance of voluntary compliance reached with Iowa will result in an additional $5 million in refunds for Iowa consumers, Miller said. The refunds will not commence immediately, however, given the need to coordinate those refunds with the refunds required by the court order in the multi-state settlement, he said.
Under the combined court order and assurance of voluntary compliance agreement, the Iowa Attorney General’s Office will receive $1.2 million to cover costs of the refund program, attorney fees and court and other costs.