Washington Attorney General Bob Ferguson joined with attorneys general from 21 other states to announce that social networking site Classmates.com and floral delivery company FTD have agreed to pay $11 million to resolve allegations the companies engaged in misleading advertising and billing practices.
The states allege that Classmates, Inc. (Classmates), Florists’ Transworld Delivery, Inc. and FTD.com, Inc. (collectively, FTD), engaged in misleading, unfair and deceptive practices in violation of state consumer protection laws. The businesses were affiliates, until they spun off to form independent companies in 2013.
“Consumers have a right to expect companies to clearly disclose the terms of their services,” Ferguson said in a Monday media release. “When a business fails to do that, my office will hold them accountable. I will not tolerate deceptive business practices.”
The states’ investigation focused on the companies’ relationships with third-party marketing partners like discount buying clubs and travel rewards programs. These groups used “negative option marketing,” a sales practice requiring consumers to either opt out or be treated as having assented to charges.
Unbeknownst to the consumer, Classmates and FTD would share consumers’ personal information, including credit card account numbers (a practice known as “data pass”) so that the consumer could be billed for these offers if they did not opt out. Congress banned data pass in Internet transactions in 2010 with the passage of the Restore Online Shoppers’ Confidence Act.
The agreement also provides for restitution to eligible consumers who were enrolled into Classmates’ subscription service without authorization or who experienced difficulty when trying to cancel their Classmates subscriptions.
The attorneys general investigated Classmates’ renewal and cancellation practices in connection with subscription services offered to consumers through its website, Classmates.com. Classmates subscribers are eligible for restitution if Classmates charged them for a subscription without their authorization, obtained their authorization through a misrepresentation or omission when the consumer initially subscribed to the service, or charged the consumer after the consumer cancelled the subscription.
The companies have agreed to significant changes in their business practices. Classmates will more clearly disclose to consumers that their subscriptions will automatically renew, and it will be easier for consumers to cancel subscriptions going forward. Both Classmates and FTD will also ensure that consumers knowingly consent to the purchase of any membership program offered by a marketing partner. Neither company admitted wrongdoing.
Washington consumers who believe they are eligible for Classmates subscription refunds are urged to file a complaint with the Attorney General’s Office at www.atg.wa.gov/file-complaint before Aug. 24.
Consumers who previously filed complaints with the AGO regarding Classmates’ renewal and cancellation practices may also receive restitution under the settlement.
The states included in the settlement are: Alabama, Alaska, Delaware, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Michigan, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Vermont, Washington, and Wisconsin.
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