Conn. firm agrees to pay $8M to settle complaints over hidden fees to Internet shoppers

Deal reached in NY Internet shopping fees case

NEW YORK — A marketing company has agreed to pay $8 million to settle allegations that it tricked Internet shoppers into signing up for discount clubs with hidden fees.

New York Attorney General Andrew Cuomo announced Wednesday that Stamford, Conn.-based Affinion Group had also agreed to permanently suspend certain marketing programs he called “deceptive,” and which had been the subject of complaints nationwide.

A company spokesman, Mike Bush, said Affinion would strive to ensure that its marketing material always incorporates “clear, prominent and unambiguous terms.”

Internet discount clubs have come under fire from Congress and regulators in several states.

The basis for many of the complaints was a practice, suspended by Affinion in January, in which Internet shoppers were offered cash back on their purchases simply by clicking a box as they completed their transaction.

Many buyers didn’t notice disclosures warning them that accepting the offer enrolled them in a club with a monthly fee. The transaction was made even easier to miss because, until recently, some merchants would automatically forward customer credit card information to Affinion.

Some customers didn’t figure out what was happening for months, as the fee amounts were small and easy to miss on their monthly credit card statements.

Affinion and companies with similar programs, including Vertrue and Webloyalty, began requiring customers to enter their credit card number manually last winter as complaints from regulators mounted.

Some retailers who had offered the companies space on their websites, including Priceline, Expedia, and 1-800-Flowers, severed ties.

Affinion always maintained that it never intended to mislead anyone, and that its discount programs provided real benefits.

The settlement calls for a $5 million customer restitution fund, and another $3 million in fines.

Five retailers that had allowed Affinion or similar marketing companies to piggyback on their websites have also agreed to pay $2 million in refunds and other penalties.

They include Classmates Online Inc., FTD Inc., Budget, GameStop and Avon.

In addition, the company, which does the bulk of its business in direct-mail advertising, has also agreed to stop soliciting for its marketing programs by mailing customers checks.

Customers who cashed the checks, which appeared to be rebates for retail purchases, would be signed up for the discount program — again, often without realizing they were enrolling in a fee-based service.