MemberWorks Settles With NY AG Over Telemarketing Practices
MemberWorks Inc., Stamford, CT-based telemarketing firm, has reached a settlement with the New York state Attorney General’s office regarding allegedly unauthorized credit card charges and use of third party information.
According to New York Attorney General Eliot Spitzer’s office, MemberWorks used customer name and account information provided by several major financial institutions, including MemberWorks’ client Citibank. This information was then used to solicit customers for MemberWorks’ membership clubs.
Customers were offered free 30-day trial memberships in various clubs, but then had charges ranging between $60 and $144 added to their credit cards without their knowledge or consent, the Attorney General said in a statement.
MemberWork’s solicitation used a “negative option” strategy, in which consumers were responsible for choosing not to continue with the club after the free 30-day period ended.
Under the terms of the settlement, MemberWorks agreed to clearly disclose the negative option before customers enrolled, and again when the renewal was due. The company also agreed to:
* Tape every customer’s consent to ensure that it is knowingly given
* Provide accurate, non-misleading information about the value of the membership
* Disclose that the financial institution that provided MemberWorks with the consumer’s data is not the organization offering the program
* Disclose that MemberWorks already has the customer’s credit card number for automatic billing.
MemberWorks also agreed to automatically double the refund for consumers who complain about the non-authorization of the credit card if the company cannot provide a tape of the consent. The company also agreed to reimburse the Attorney General’s office $75,000 in investigative costs.
The settlement is part of an ongoing series of investigations by Attorney General Eliot Spitzer’s office into use of sales of consumer data to third party marketers.
