Affinion Group Inc. agreed to pay $8 million to settle claims by New York”™s attorney general that it tricked customers into signing up for discount clubs that charged hidden fees.
Also reaching a settlement were Avon Products Inc., Budget Rent A Car System Inc., Classmates Online Inc., FTD Inc. and GameStop Corp., which agreed to pay $2.1 million total for consumer refunds, education, costs and fees.
Stamford-based Affinion and its subsidiary Trilegiant agreed to pay $5 million as restitution to consumers and an additional $3 million in penalties and fees.
In the second quarter, Affinion lost $35 million while recording $341 million in revenue, and had $276 million cash on hand as of June 30.
Cuomo said his investigation determined that when consumers completed online purchases from retailers, they were often presented with a cash-back or discount offer from a marketer like Affinion. Information about accepting the offer and its ramifications ”“ including the fact that the consumer was agreeing to transfer his or her credit or debit card account information ”“ was buried in fine print. Since consumers were not required to provide their financial information as part of the enrollment process, they often accepted the offer without knowing they were joining a fee-based program.
Cuomo added that Affinion and other companies also mailed checks to consumers that looked like rebates or rewards from known retailers, but when cashed would sign up for the consumer for a fee-based program.
“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, in a prepared statement. “Affinion (and) 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”™s office is also investigating Vertrue Inc. and Webloyalty Inc., which are both based in Norwalk.
