John Suthers (R)DENVER (Legal Newsline) - Attorneys for the state of Colorado have reached a settlement with an Internet marketer and seller of nutritional supplements to bring them into compliance with consumer protection laws, Colorado Attorney General John Suthers has announced.
Nutra Pills Inc., and its owner, Joshua D. Bezoni, will also reimburse consumers who did business over the last year with the company.
The Arvada, Colo.-based company, also doing business as Golf Nutrition Sciences and GNS, has used so-called "free-to-pay conversion" marketing since 2005. This practice led to consumers unknowingly incurring ongoing payments for products that they initially believed were free.
"Our office and our partners at the Better Business Bureau receive thousands of complaints every year concerning free-to-pay conversion schemes," Suthers said. "This agreement will ensure that Mr. Bezoni's future businesses will be required to clearly disclose exactly what consumers are signing up for when they request a free sample. Consumers should always beware of any offer that purports to be free. If it sounds too good to be true, it probably is."
According to court filings, consumers signed up for free trials of products, including Acai Berry Edge, Acai Berry Elite and Slim Seduction. At the time of placing their order, consumers believed that they were only authorizing the shipping and handling charges for the free trial. When the trial arrived, however, a two-month supply of the product was also sent. The consumers were given a limited amount of time to return the product or face a nearly $80 charge within 30 days.
If the consumers failed to take any action to cancel the order and send the two-month supply of the product back, the company enrolled them into its "continuity" plan. Under the plan, consumers are sent products and charged nearly $80 for each shipment.
Over 1,000 consumers complained that they did not realize they were agreeing to the additional charges associated with the free trial offer and that after learning of their enrollment, it was too difficult or too late to get their money refunded.
Bezoni and his businesses, under terms of the settlement, are prohibited from marketing "free" products unless they are actually free and not part of a free-to-pay conversion plan. The defendants are also barred from enrolling consumers into continuity plans unless the terms of the plan, including the cancellation policy, are clearly and conspicuously disclosed to consumers prior to signing up to receiving a product. The terms must also be disclosed after the transaction has been completed.
An express authorization must also be obtained by the defendants from consumers for all charges associated with the initial transaction, including future charges, and disclose when those charges will be levied.
Additionally, Bezoni and his businesses must allow consumers to cancel in the same manner as they signed up for a sample. The defendants are also required to obtain express authorization every 12 months from consumers already enrolled in a continuity plan to remain enrolled.
Bezoni and Nutra Pills will pay a $100,000 find under terms of the agreement, with half of that payment suspended for a period of five years provided the defendants do not violate the settlement. All consumer complaints filed since December 2006 must also be reimbursed as well as reimbursements for all consumers who requested but were denied funds since December 2008.
Nearly all of the company's $40 million in sales generated in 2009 came as a direct result of its free-to-pay conversion sales. The company, since Attorney General Suthers launched his investigation into Nutra Pills one year ago, has refunded nearly $9 million dollars to consumers and ceased doing business.