DES MOINES, Iowa (Legal Newsline) - Iowa Attorney General Tom Miller issued an assurance of voluntary compliance on Dec. 7 with a Connecticut company that allegedly violated the Iowa Consumer Fraud Act and Iowa's Buying Club Memberships Law.
The Middletown-based Clarus Marketing Group, which owns freeshipping.com, will stop selling memberships to Iowans and will pay $154,126 to provide partial or full refunds to Iowa consumers.
Clarus denied any liability or wrongdoing but agreed to resolve Miller's allegations by ceasing to enroll and charge Iowa residents.
Freeshipping.com enrolls consumers by offering a free shipping coupon after a consumer completes a transaction on another business' website, such as BestBuy.com, Target.com or Walmart.com. Under its post-transaction marketing arrangement, Clarus enrolled the consumer in a monthly buying club or membership program and charged the credit or debit card of the consumer from approximately $8-$15 in monthly fees.
"Consumers may think they're taking advantage of a one-time, free shipping promotion, not realizing they're enrolling in a buying club," Miller said. "So they often end up paying ongoing monthly charges for a membership that they don't know they have and don't use."
Clarus agreed to provide customer payment information that will allow Miller's Consumer Protection Division to contact consumers and provide full or partial refunds under the AVC.