DES MOINES, Iowa (Legal Newsline) - Iowa Attorney General Tom Miller announced on Monday that two companies affiliated with JCPenney will pay customers who were enrolled in buying club memberships more than $2.7 million.
Polk County District Court Judge Richard G. Blane II approved a consent judgment on Thursday against JCPenney Direct Marketing Services LLC and Stonebridge Benefit Services Inc., both of Plano, Texas.
The judgment resolves an August 2011 consumer fraud lawsuit brought by Miller against Stonebridge that added JCPenney as a defendant in March.
"Our lawsuit alleged that these defendants repeatedly violated Iowa law over the course of many years by enrolling thousands of JCPenney customers into membership programs, and then charging their credit cards repeatedly for programs many consumers didn't even know they were members of," Miller said.
Miller alleges that membership charges were made to credit or debit cards used by consumers to make purchases from JCPenney. The memberships include a negative-option arrangement requiring consumers to affirmatively cancel to avoid charges.
Tens of thousands of Iowans were allegedly enrolled in several different membership programs, including PlanPlus, MotorPlus, BackPorch Home & Garden, Leisure Plus, Fun Family Rewards, Everyday Bargains, Perfect Home, Savings Solution and Savings2Go.
Under terms of the consent judgment, JCPenney and Stonebridge will comply with Iowa's Buying Club Law and Consumer Fraud Act in connection with any future sale of memberships. The defendants will also pay $2,738,448 in consumer refunds and $164,375 to the state for consumer fraud enforcement.
The defendants denied liability in agreeing to the judgment, though Miller said that Stonebridge's conduct of the litigation included obstructionist tactics, violations of court orders and a court-imposed sanction.