BrandDirect, a Shelton, CT-based telemarketer of buying-club memberships, has settled a lawsuit with the Washington and Connecticut state Attorneys General over alleged deceptive telemarketing practices and misuse of private financial information.
BrandDirect will to pay a total of $1.9 million in penalties, fees, and consumer education funds, and about $11 million in restitution to settle a lawsuit accusing the company of charging consumers for buying-club memberships without permission and engaging in other deceptive and unfair practices.
BrandDirect spokesman Tom Drohan told DIRECT Newsline he was “disappointed in the tone” of the AGs’ statement, said that BrandDirect had been reviewing its marketing practices with both AGs for the past year, and “absolutely denied any wrongdoing.”
The suit, according to the Washington AG, charged that the company used information provided by financial institutions, including First USA Bank, CitiBank, Chase Manhattan Bank and others, to develop lists of consumers who are then called by telemarketers. Consumers were then offered an opportunity to join discount-buying clubs that cater to consumers’ particular interests.
BrandDirect obtains consumers’ charge card information from the banks, allowing BrandDirect to conveniently bill consumers who agree to join. In some instances, however, the information is used to make unauthorized charges against consumers’ accounts, Washington AG Cynthia Gregoire said.
Under the settlement, the two states will share the $1.9 million in penalties, fees, and consumer education funds and current buying-club members nationwide will each receive three weeks free membership. The estimated value of the additional weeks of membership is $4 per member.
The settlement also prohibits the company from engaging in future deceptive practices and requires the company make specific disclosures about its ability to directly charge consumers’ credit cards and to improve cancellation, automatic renewal and refund procedures.
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