SPARTANBURG, S.C. (Legal Newsline) - Four years after being part of a $14.5 million settlement with 15 state attorneys general, Trilegiant is still being accused of enrolling unwitting consumers into buying clubs.
The latest accusation that the company is using unfair business practices came from outgoing South Carolina Attorney General Henry McMaster, who filed a lawsuit against Trilegiant on Dec. 17.
McMaster alleges that Affinion and subsidiary Trilegiant "charge South Carolina residents' credit cards and bank accounts for discount programs or 'memberships' when residents do not know they are being charged for such programs, do not know they are enrolled in 'memberships,' and do not use any of the alleged 'membership' benfits."
It is a similar allegation as the one made in November by Iowa Attorney General Tom Miller. Miller says he received more than 200 complaints from Iowans who said their credit cards were charged by Trilegiant for clubs they didn't know they were enrolled in.
McMaster alleges Trilegiant entered into agreements with partnering companies whereby a consumer's credit or debit card information would automatically be transferred from the company's website to Trilegiant.
Thus, consumers unknowingly agreed to a third-party membership transaction without personally entering their credit or debit card number, the lawsuit alleges.
Trilegiant also offered 30-day free memberships to consumers who were charged monthly after 30 days unless they opted out, McMaster says.
Another of McMaster's allegations is a familiar one. He says Trilegiant mailed small value checks to consumers who made purchases with its partnering companies that were disguised as refunds or rewards.
McMaster says that by cashing the check, the consumer was enrolled in one of Trilegiant's membership programs.
Trilegiant and Chase Bank paid $14.5 million to 15 states to settle similar allegations in December 2006.
One of the AGs who took part in the settlement, Washington's Rob McKenna, used Trilegiant is an example of a company using high-pressure tactics online in testimony before the U.S. Senate Committee on Commerce, Science and Transportation last year.
A few months after that testimony, New York Attorney General Andrew Cuomo began an investigation that resulted in an $8 million settlement with Trilegiant and Affinion in August.
They agreed to start a $5 million fund to provide restitution to consumers who were allegedly defrauded by their actions, and to also pay an additional $3 million in penalties and fees.
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.