Companies pay $8.5M to settle hidden fees charges

Keith Loria Sep. 21, 2010, 3:29pm


NEW YORK (Legal Newsline) - New York Attorney General Andrew Cuomo announced on Tuesday that he has reached $8.5 million in settlements with numerous discount clubs that allegedly tricked consumers into signing up for deals that contained hidden fees.

This settlement comes only a month after Cuomo reached settlements with other discount clubs totaling $10 million.

Under terms of a settlement with, Inc., the company agreed to pay $5.2 million in penalties, costs and fees. It will also refund fees charged to certain consumers who unknowingly enrolled in or did not authorize billing for its discount clubs and programs.

Webloyalty has also agreed to cease obtaining consumers' billing information from online partner retailers and will change its online marketing practices so that people will understand what exactly they are enrolling in and any costs involved. The company will also offer redemption forms for rebates immediately to consumers online.

In separate agreements, Cuomo made deals with five retailers who partnered with Webloyalty - Ticketmaster LLC; Pizza Hut, Inc.; Orbitz Worldwide LLC; Shutterfly, Inc.; and MovieTickets, Inc.

Collectively, this group will pay more than $3.3 million that will pay for consumer education, refunds and the costs of legal action. They are also required to change their marketing practices when dealing with discount club sellers.

Orbitz will pay $1.2 million, Shutterfly will pay $952,200, will pay $681,283, Ticketmaster will pay $455,000 and Pizza Hut will pay $78,750.

Cuomo alleges that when consumers completed online purchases from these retailers, they were often presented with a cash-back or discount offer from a marketer like Webloyalty.

Many times, important information about a consumer agreeing to transfer his or her credit or debit card account information was buried in fine print and cluttered text, Cuomo says, causing many to enter into agreements without realizing they were enrolling in fee-based programs.

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