December 07, 2011 10:03 am Times Bureau(1) Comments
DES MOINES Iowa Attorney General Tom Miller announced Wednesday that the company that owns freeshipping.com will stop selling memberships to Iowans and will pay $154,126 for full or partial refunds to Iowa consumers after Miller accused the company of violating the Iowa Consumer Fraud Act and Iowas Buying Club Memberships Law.
Under an Assurance of Voluntary Compliance agreement that took effect Wednesday, Clarus Marketing Group, based in Middletown, Conn., denies wrongdoing or liability but agrees to resolve Millers claims by ceasing to enroll and charge Iowa residents, according to a statement issued by the Iowa Attorney Generals Office.
Freeshipping.com enrolls consumers by offering a free shipping coupon after the consumer completes a transaction on another businesss website, according to Millers office. Under this post-transaction marketing arrangement, Clarus enrolls the consumer in a monthly membership program, or buying club, and charges the consumers credit or debit card approximately $8 to $15 in monthly fees.
Consumers may think theyre taking advantage of a one-time, free shipping promotion, not realizing theyre enrolling in a buying club, Miller said in a statement. So they often end up paying ongoing monthly charges for a membership that they dont know they have and dont use.
Clarus has agreed to provide customer payment information that will allow the Consumer Protection Division to contact consumers and provide partial or full refunds under the settlement, according to the AGs office.
Miller said the underlying problem of charges that consumers did not knowingly authorize affects many Iowans.
What we find time after time is that consumers get enrolled in memberships when theyre shopping online, and then unwanted charges start appearing on their credit or debit cards, Miller said. We use Iowa laws to prevent or stop improper stealth marketing whenever possible, but consumers also need to protect themselves by being on the lookout for unauthorized charges.