Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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February 22, 2008

Attorney General Hardy Myers Files Agreement With Direct Marketing Company To Change Its Business Practices

Attorney General Hardy Myers today filed a settlement agreement with a Pennsylvania direct marketer of womens' hosiery and other merchandise resolving allegations of using misleading advertising resulting in consumers unknowingly signing up for a continuous plan to receive merchandise. Named in an Assurance of Voluntary Compliance (AVC) filed in Marion County Circuit Court is HCI Direct, Inc., (HCI) headquartered in Bensalem, Pennsylvania. The agreement, also filed by Attorneys General in 15 other states, does not admit law violation. Oregon joined Texas and North Carolina on the Executive Committee with Pennsylvania as the lead state.

"In addition to the 36 consumers who filed complaints in our office, many other Oregonians will recognize this method of operation," Myers said. "Unscrupulous businesses often use a free gift to entice consumers to respond to a solicitation and the consumers only discover at a later date that they have been enrolled in a program to continually receive merchandise with no clear way of quitting."

Myers added that, in using this plan, HCI Direct sold over ten percent of all hosiery in the United States shipping nearly 10 million packages a year to two million active customers.

HCI recently expanded its practice from selling Silkies pantyhose to Enriche moisturizer and Pain Vanish pain cream. A previous multi-state investigation resulted in a 1997 AVC with a predecessor company known as Hosiery Corporation of America. Oregon was not part of that action but more than 39 Oregonians filed complaints against Hosiery Corps containing most of the same allegations as in the HCI case.

Today's HCI agreement requires the company to change its marketing practices of mailing offers of free samples of merchandise, such as hosiery. After consumers responded to this solicitation, consumers then became enrolled in a continuity sales plan. Under this plan, if a consumer did not cancel, payment by the consumer for one shipment automatically triggered another shipment. As a result of their investigation, the Attorneys Generals alleged that HCI's conduct in running its continuity sales plan violated consumer statutes in failing to clearly and conspicuously disclose all of the material terms and conditions.

Under the terms of the agreement, the company committed itself to include in the intitial solictation, as well as subsequent mailings, a clear and conspicuous dislcosure of all material terms, conditions and obligations of the offer. Moreover, the company agreed to obtain an affirmative response from consumers before enrolling them in the plan and before providing any merchandise, including free samples. The company also must include in its mailings a toll-free number, a mailing address as well as a website address that consumers may contact in order to cancel.

HCI agreed to pay a total of $455,000 to the states for consumer protection and education purposes. Oregon will receive $34,000. The company also agreed to provide full and complete restitution to consumers who file complaints, claiming that they did not order merchandise or goods shipped by the company.

Consumers wanting more information about this case and consumer protection in general 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. The Oregon Department of Justice is online at www.doj.state.or.us.


Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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