Schneiderman settles suit with discount club for $2M
NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $2 million settlement on Thursday to resolve allegations that New York consumers were tricked into enrolling in a discount club with hidden fees.
Vertrue Incorporated and its subsidiary, Adaptive Marketing LLC, allegedly entered into arrangements with retail companies, such as VistaPrint, Intelius and Classmates, allowing the company to solicit customers of the companies by offering rebates, discounts and incentives for online shopping. The consumers were then allegedly unknowingly enrolled in Adaptive's fee-based membership program.
"This scheme tricked thousands of New York consumers into unknowingly signing up for memberships programs they did not want or need," Schneiderman said.
"The discount-club seller Adaptive profited by luring consumers with enticing but deceptive offers that included hidden membership fees. This settlement helps make the internet a safer place for consumers to shop."
Because Adaptive obtained the consumers' credit or debit card account information from the retail partners, consumers did not have to re-enter their credit or debit card account numbers and were allegedly not aware that they were enrolled in the fee-based membership program.
Consumers allegedly had a brief free trial period, followed by a $15 or more monthly charge until the consumer canceled the membership proactively. Many consumers allegedly incurred the fees for months without realizing they had enrolled and a large portion of them experienced difficulties canceling the programs after contacting Adaptive.
The information about joining Adaptive's program, the monthly fees and the allegedly secret transfer of the debit or credit card information was located in the cluttered fine print of the webpage, allegedly causing most consumers to miss the terms and conditions, Schneiderman says.
Under the terms of the settlement, Adaptive has agreed to implement major reforms to protect online shoppers in New York from being deceived by the cash-back and discount advertisements. The reforms include providing a consumer-friendly exit from any discount club seller's solicitations that interrupt the completion of a consumer's transaction with the original retailer; notifying consumers when they have been redirected to a discount club seller's site from the original website of the retailer; warning consumers that the incentive is for joining a separate company's membership club; requiring consumers to enter full debit or credit card numbers; and other information for billing on the discount club seller's enrollment page prior to enrolling a consumer in an Adaptive membership program, and ensuring that consumers understand they are enrolling in the Adaptive membership program in the first place.
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