July 1, 2004
MemberWorks, Inc. will pay nearly $1 million to Florida to settle accusations of deceptive consumer practices. The company also agreed to issue double refunds to any Florida consumer who receives a credit card charge that MemberWorks cannot document by showing that the consumer consented to the charge.
Florida Attorney General Charlie Crist said the settlement ends a four-year investigation and prosecution. The state had accused MemberWorks of using telemarketing practices that caused unwanted credit card charges to be billed to Florida consumers' accounts.
"The State of Florida will not tolerate deceptive telemarketing practices," said Crist. "Those who seek to solicit Floridians should know that the Attorney General's Office will be vigilant in our efforts to protect consumers."
The Attorney General's Office filed its suit in October 2003, and more than 1,000 Floridians complained about receiving unwanted credit card charges for MemberWorks' programs.
The company typically marketed its products in conjunction with infomercial products, and consumers calling to order products were told they would receive a MemberWorks membership as a bonus for their purchase. The bonus actually resulted in a credit card charge for MemberWorks' membership programs if the consumer did not actively seek to cancel the purchase.
The settlement agreement requires MemberWorks to pay the state $950,000 in fees and costs. In addition, the company must issue double refunds to any Florida consumer who receives a credit card charge for a MemberWorks program where MemberWorks cannot provide documentation showing that the consumer consented to the charge.
The agreement also requires MemberWorks to clearly disclose all terms and conditions of its programs, to obtain consumers' express consent to charge their credit cards for MemberWorks' programs, and to report their compliance with the double refund policy for a period of three years.
At least four other states -- Minnesota, New York, Nebraska, and California -- have obtained either an Assurance of Voluntary Compliance ("AVC") or a court settlement with MemberWorks. Nebraska obtained an AVC in February 2001 that applies nationwide. The AVC requires MemberWorks to provide refunds to consumers alleging unauthorized charges and includes detailed conduct provisions applicable to MemberWorks' marketing of membership programs.
