Stamford, CT-based Telemarketer MemberWorks Inc. has reached a settlement with New York State Attorney General Eliot Spitzer regarding alleged unauthorized credit card charges and use of third-party information. The AG’s office said the company used customer name and account information provided by several major financial institutions, including MemberWorks’ client Citibank. The information was used to solicit customers with a free 30-day trial membership in various clubs. However, these individuals then had charges ranging between $60 and $144 added to their credit cards without their knowledge or consent. The solicitation used a negative-option strategy in which consumers were responsible for choosing to discontinue the trial membership after the free 30-day period ended. Among several other settlement terms, MemberWorks agreed to clearly disclose the negative option before customers enrolled; to do the same again when the renewal was due; and to record every customer’s consent to ensure that it was knowingly given. The telemarketer will double refunds for consumers who complain about non-authorized use of their credit card if the firm can’t provide a tape of the consent. It also will reimburse the AG’s office $75,000 in investigative costs.
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