NEW YORK (Legal Newsline) - New York Attorney General Andrew Cuomo announced on Wednesday that he has reached settlements totaling $10 million with numerous discount clubs that allegedly tricked consumers into signing up for deals that contained hidden fees.
Affinion Group and its subsidiary, Trilegiant, has agreed to start a $5 million fund to provide restitution to consumers who were allegedly defrauded by their actions, and must also pay an additional $3 million in penalties and fees.
Affinion/Trilegiant has also agreed not to enroll New Yorkers in programs by soliciting in the form of mailed checks.
"This is a case of consumers who think they are getting a deal when in fact they are being tricked into signing up for a service that bills them every month without their knowledge," Cuomo said.
"As our investigation continues, consumers should be on the lookout for cash-back and other discount offers that suddenly appear online or in the form of a check-they are often too good to be true.
"Affinion/Trilegiant did the right thing by cooperating with my office to end its deceptive practices and I urge other companies involved in this industry to follow their lead."
Cuomo also obtained settlements with FTD, Inc., Budget, GameStop, Avon and Classmates Online, with each required to reform its marketing practices and pay a combined $2 million for consumer refunds, education, costs and fees.
Classmates Online will pay $960,000, FTD will pay $640,000, Budget will pay $207,000, GameStop will pay $195,000 and Avon will pay $68,000. The money will go towards paying for consumer education and refunds.
The settlement calls for these companies to reform their marketing practices, end all mailed check solicitations and permanently stop the practice of providing consumers' billing information to companies that market discount clubs online.
Cuomo alleged that when consumers completed online purchases from these retailers, they were often offered a cash-back or discount deal from a marketer like Affinion/Trilegiant. These offers had ramifications of accepting buried in the fine print, which often included allowing credit and debit card account information that would be processed in a fee-based program, Cuomo says.