$11 million multistate settlements reached with Classmates, Inc., Florists Transworld Delivery, Inc., and FTD.com Inc.
TALLAHASSEE, Fla.-Attorney General Pam Bondi and 21 other attorneys general today announced two multistate settlements with Classmates, Inc., FTD.com, Inc., and Florists’ Transworld Delivery, Inc. (FTD). The settlements total $11 million and settle allegations that the companies engaged in misleading advertising and billing practices.
According to the complaints, the companies collaborated with third parties that used unlawful negative option marketing practices to sell membership programs to Classmates and FTD customers online. Negative option marketing is a sales practice where a seller treats a consumer’s failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services often including consent to be automatically billed for subsequent periodic charges without any further disclosure to the consumer.
The complaints allege that these third-party marketers offered programs such as discount buying clubs and travel rewards programs, often immediately after the consumer’s online transaction with Classmates or FTD and failed to adequately inform consumers that their subscriptions would automatically renew. The complaints also assert that the companies made it difficult for consumers to cancel their subscriptions.
Under the settlements, Classmates have agreed to make significant changes to their business practices, including more clearly disclosing to consumers that Classmates subscriptions will automatically renew and making it easier for consumers to cancel their subscriptions. The settlements include a number of terms to ensure that consumers knowingly consent to the purchase of any membership program offered by a marketing partner of Classmates or FTD, including the following injunctive terms:
The companies are prohibited from misrepresenting the reason for requesting a consumer’s account information;
The marketing partners cannot use the companies’ names or logos in the title of a membership program, and any offer must be made after the consumers have concluded their transactions with Classmates or FTD so that consumers understand they are receiving a separate and distinct offer from a company other than Classmates and FTD;
The consumers must receive clear and conspicuous disclosures informing them that they will be transferred to another site to receive a membership offer, and the consumers must consent to the transfer before being transferred to a marketing partner to receive the trial offers;
The companies and their marketing partners cannot state an offer is free or risk-free if the offered program will convert to a paid subscription; and
The companies are prohibited from making misrepresentations and material omissions, including making any misrepresentations concerning the reason or purpose for which a consumer is receiving an offer for enrollment in a membership program.
In addition to these conduct remedies, Classmates and FTD have agreed to make an $8 million payment to the attorneys general. Classmates is also establishing a $3 million restitution fund to provide refunds to consumers who were enrolled into Classmates’ subscription services without authorization or who experienced difficulty when trying to cancel their Classmates subscriptions.
Consumers seeking refunds from Classmates, and who have not previously filed complaints with the Attorney General’s office, may do so at MyFloridaLegal.com or by calling 1-866-9-NO-SCAM within 90 days of the execution date of the settlement. Consumers who previously filed complaints regarding Classmates’ renewal and cancellation practices may also receive restitution under the settlement. Today’s settlements are pending judicial approval.
Source: Office of the Attorney General