Iowa AG secures restitution from Illinois company

Keith Loria Aug. 19, 2010, 3:00pm


DES MOINES, Iowa (Legal Newsline) - Iowa Attorney General Tom Miller announced on Wednesday that he has reached an assurance of voluntary compliance with a direct marketing company based in Illinois that will pay $225,000 for allegedly violating consumer laws in Iowa.

United Marketing Group sells membership programs via the Internet, direct mail and telemarketing through arrangements with third parties that claim to offer discounts for services and merchandise to consumers who sign up and are then charged a monthly fee, Miller says.

Miller alleges UMG charged Iowans on their credit cards or other payment methods for memberships they didn't realize they had and did not use. The attorney general also alleges that the company violated the state's Buying Club Memberships Law by not issuing certain notices and disclosures to consumers once they were enrolled in the memberships.

Under the agreement, UMG will cease practices that violate the law. The company must also disclose all membership terms and transactions clearly, contact member consumers at least once every nine months so that they are aware of all fees involved and show all future marketing materials to the Consumer Protection Division before issuing any new membership program materials.

The $201,250 UMG paid to the state will go to refund Iowa consumers who were charged for unwanted memberships. Another $23,750 will be directed towards the state's Consumer Fraud Enforcement Fund. UMG denies any wrongdoing or liability.

CPD will send out letters to more than 3,400 Iowans who were wittingly or unwittingly enrolled as UMG members, and who incurred the highest losses according to company records. Most refunds will be approximately $50.

In a similar case from March, a judge ruled that Connecticut-based buying club Vertrue used deceptive and unfair practices while marketing memberships to close to 500,000 Iowans. A hearing is scheduled for October, with Miller seeking $36 million in restitution for state consumers.

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