Missouri AG Sues Over Nationwide Rebate Scheme

The Missouri Attorney General has frozen $10 million in two bank accounts of companies allegedly using a nationwide rebate scheme to deceive consumers.

The state filed suit in Jackson County Circuit Court on Feb. 16 against a Kansas City-area business, Consumers Trust, which operates out of England, and Consumer Promotions, Inc., based in Lee’s Summit, MO. The state alleges that the scheme promised consumer rebates’ yet had qualifications “almost impossible for consumers to meet,” Missouri AG Jay Nixon said in a statement. The scheme crosses at least 40 states and other states have signaled interest in participating in legal action.

“There’s the potential that there may be a multi-state action,” said Jim Gardner, a spokesperson for Nixon.

Nixon said that for the last three years, consumers nationwide had bought big-ticket items such as cars, hot tubs, carpeting, swimming pools and even cosmetic surgery, in the hopes of getting a rebate for the full or a significant portion of the purchase price after three years. But confusing and vaguely worded rules prohibited consumers from getting the rebates they requested. One of the more onerous terms of the voucher warns consumers that their vouchers will be invalidated if anyone reminds them to file a claim or assists them with the claims process. He said the claims were rejected by Consumers Trust, which operates the cashable vouchers program.

“The whole program is set up to frustrate claims, pure and simple,” Nixon said. “The wording in the rules is intentionally vague, and consumers have had their claims arbitrarily rejected, without any recourse. In some cases, after the three years are up, the consumers even have been told there is not enough money to immediately satisfy their particular claim. This scheme violates the law and needs to come to a halt right now.”

Officials at Consumer Promotions could not be reached for comment.

The cashable voucher program duped consumers out of more than $24 million in potential rebates, the AG said.

“We estimated that more than $160 million was spent by consumers nationally who relied on the rebates,” spokesperson Gardner said. “Maybe a couple of percent of the people made it through the program, that was when the red flag went up.”

Consumer Promotions markets the voucher program to merchants as a way to increase sales. The rebates incent consumers to make purchases with the promise of the refund. Merchants pay 15% of the voucher value to Consumer Trust who said the money would be held exclusively to pay consumer claims.

In addition to freezing the companies’ assets, Nixon asked the court to require the firms to immediately cease violating Missouri consumer protection laws. He also is seeking a court order to pay consumer restitution, a civil penalty of $1,000 per violation and 10% of total restitution, and to reimburse the state for legal and investigative costs.