Oregon joins 15 Attorneys General in resolving allegations that the companies misled consumers with supposedly "free trial" offers; and disguised rebates / rewards that were actually "activation checks"
Attorney General Hardy Myers today filed settlement agreements totaling $14.5 million with Chase Bank and Trilegiant Corp. resolving allegations the companies unlawfully deceived consumers into paying for membership programs that they believed provided discounts on car and home repair, shopping, and other goods and services. Named in an Assurance of Voluntary Compliance filed in Marion County Circuit Court are Chase Bank USA, N.A., and Chase Home Finance, LLC, with offices in New York City, New York and Chicago, Illinois. Named in a complaint and stipulated general judgment also filed in Marion County is Trilegiant Corporation of Norwalk, Connecticut. The agreements admit no violation of law.
"The companies conspired to solicit Oregonians with offers of 'free' trials in membership programs, without adequately explaining that they would be charged automatically if they did not cancel within a specified period of time," Myers said. "Chase not only gave Trilegiant access to its customer base to market the programs but let Trilegiant solicit using the bank's name causing customers to believe they were only dealing with their local bank."
The 16-state settlement requires Trilegiant to pay more than $8 million in restitution to all consumers who have already complained to Trilegiant or their Attorney General, or who complain in writing within the next nine months. Oregonians who were charged for memberships make-up approximately four percent of the number of victims included in the settlement with Trilegiant and Chase.
Consumers who signed up for membership in a Trilegiant club through any bank or other company they did business with, and who were first charged membership fees on or after July 1, 2001 also are eligible to receive restitution.
Additionally, Trilegiant is required to send renewal notices to consumers who have active memberships advising them that they have purchased the membership and how to cancel the membership if they wish. If there are not enough funds to make full restitution to all consumers who complain, then those consumers who complain over the next ninth months will get a pro rata share. All consumers who have already complained will receive full restitution.
Trilegiant and Chase also will pay more than $6 million to Oregon and the 15 other settling states to cover civil penalties or as payments in lieu of civil penalties, and for costs and fees. Trilegiant is paying $357,846 and Chase is paying $125,000 to the Oregon Department of Justice Consumer Protection and Education Fund.
The states' investigators found most solicitations included a check for a small amount of money, between $2 and $10, which consumers often thought were rebates or rewards. However, by cashing the check, the consumer unknowingly agreed to pay for the membership program after the trial offer ended. The solicitations were often included in the consumers' mortgage or credit card statements, or in mailings with Chase's logo on the envelope and letterhead.
If consumers did not affirmatively cancel within the required time, Trilegiant automatically billed the membership fees to consumers' credit card or loan statement on either a monthly or yearly basis, depending on the particular membership program. Trilegiant then charged consumers repeatedly until they finally cancelled their membership. Many consumers belatedly discovered they had unwittingly purchased memberships in several different clubs.
The membership programs include, but are not limited to, AutoVantage Gold Service, AutoVantage Service, Buyers Advantage Service, CompleteHome Service, Just for Me, Pet Privileges Service, Shoppers Advantage Service and Travelers Advantage Service.
To protect consumers from unlawful deception in the future, the settlement requires reforms of Trilegiant's and Chase's business practices. Future solicitations sent by Trilegiant, or any other company that solicits Chase customers in a similar manner, must clearly disclose all the terms of any "free trial," including when and how the customer will be billed for any membership, and how to cancel a membership.
Additionally, the settlement forbids Chase and Trilegiant from engaging in any deceptive conduct in the marketing of these membership programs. The prohibited practices include identifying the solicitation as a "reward" or "rebate" offer, or that any check or other premium offered as part of a solicitation is anything other than a benefit or incentive for the purchase of a membership.
Consumers wanting to know if they unknowingly paid for a membership program should carefully examine their credit card or mortgage statements and monitor their mail for any notices from Trilegiant. They also can contact Trilegiant at www.trilegiant.com, or by mail at Trilegiant Corporation, 100 Connecticut Avenue, Norwalk, CT 06850, ATTN: K. Buonagurato.
Oregonians wanting to file complaints requesting restitution for unauthorized charges may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Oregon consumers also may file complaints electronically at www.doj.state.or.us.