Surprised — that’s how Las Vegas resident Heidi Speidel felt when she found a puzzling US$100 charge on her credit card for a service called Simple Escapes. She told American Express Co. she suspected her credit card number had been hijacked, and then discovered her ISP, America Online Inc. (AOL), had helpfully supplied her billing information.
Speidel says she did not subscribe to Simple Escapes, a membership service that provides entertainment discounts and travel services. It is operated by MemberWorks Inc., a Stamford, Conn. direct marketing firm.
Speidel never typed in her credit card number for Simple Escapes. Instead, MemberWorks asserts, she authorized the company to retrieve her credit card number from AOL, which had it on file.
In a written statement, MemberWorks says Speidel was offered a US$25 Kmart gift card to join Simple Escapes, and had clicked “yes” to accept the offer on a page that included terms, conditions, and an explanation that, after a 30-day trial period, a “fee would be charged to her credit card on file with AOL.”
The company says in its statement that Speidel was sent a “thank you” page that confirmed her enrollment. In addition, MemberWorks says, it sent Speidel two e-mail messages that outlined the program’s terms and charges, and described its cancellation procedure.
Speidel canceled, MemberWorks says, and received a full US$100 refund under its “no-questions-asked refund policy for unauthorized charge complaints.”
“I’d never heard of this company and never wanted their services,” Speidel says. It took about a month to sort out the matter: “The whole mess was a nightmare,” she adds.
Speidel is among hundreds of online users who are finding they have credit card charges that stem from offers of cash back and gift cards. Many say they didn’t realize they accepted a trial membership when they took a “free” gift card from MemberWorks, Trilegiant, or other membership services firms. What’s more, it doesn’t matter that they didn’t send billing information to these companies directly; their credit card number is often shared by other businesses with which they had a different transaction.
For example, airline ticket-buyers at Orbitz could get “US$10 cash back” at the end of their transaction by accepting trial membership in Connections, a MemberWorks program. Billing data came from records Orbitz Inc. had on file.
Orbitz recently reinstated MemberWorks promotions after pulling them for several weeks. Customers had complained, says Kendra Thornton, an Orbitz spokesperson, but they might not have read the enrollment form closely. Now, MemberWorks program offers are described more clearly, Thornton says.
By Jan. 31, AOL ceased sharing members’ credit card info with its marketing partners due to “a change in customer policy,” says Nicholas Graham, an AOL spokesperson.
To the courts
The Florida attorney general sued MemberWorks last October, alleging it violated state deceptive trade practices laws by charging customers’ credit cards without authorization and by engaging in “unfair, fraudulent, and deceptive business practices,” according to its complaint. A fifth of the nearly 1,000 incidents prompting the suit involve online transactions; the rest are from telemarketing sales, according to the Florida AG’s office. MemberWorks calls the allegations “unfounded.” In a statement, it says, “The company believes that any legitimate concerns have previously been fully addressed, including our implementation of industry-leading best marketing practices and voluntary agreements incorporating those practices.”
Florida officials also confirm the state is investigating similar complaints against Trilegiant, a Norwalk, Conn.-based affiliate of Cendant Corp., the rental car and travel giant.
An Illinois class action suit against Trilegiant describes the company’s sales methods as “inherently abusive.”
“We take all consumer complaints very seriously and resolve them as quickly and efficiently as possible and to our customers’ satisfaction,” says Todd Smith, director of corporate communications for Trilegiant.
Better Business Bureaus in several states are also investigating both MemberWorks and Trilegiant. In Nebraska, where MemberWorks was founded, the BBB in December 2003 suspended the company’s good standing while investigating complaints — normal procedure during an investigation.
Scott Mecham, Nebraska BBB president, says the number of complaints is not disproportionate for a company of MemberWorks’ size, but the bureau is concerned they are all similar: Users didn’t understand they would be charged a fee and were upset that a company unknown to them obtained their billing info without their consent.
The Connecticut BBB has received 1,760 complaints about Trilegiant, many involving online transactions, says Paulette Hotton, president. The overwhelming majority involve consumers alleging unauthorized charges to their credit cards and difficulty canceling the service, she adds. Not-so-free cards
PC World (U.S.) looked at some of MemberWorks’ and Trilegiant’s online promotions and found disclaimers that the companies obtain billing data from other firms with which they do business — but that disclosure information is often literally in fine print.
For example, placing an order at credit-rating site MyFICO.com in May prompted a MemberWorks invitation for a free US$25 Lowe’s gift card and a 30-day trial for HomeWorks Plus, a shopping discount service. At the bottom of the page, an “Offer Details” section explained: “After your 30-day FREE trial, it’s just US$9.95 for a full month of savings, automatically charged to the credit card you used today with MyFICO.com.” A second disclaimer appeared beneath the form to enter an e-mail address twice to accept the terms of the agreement.
More prominent was the text “US$25 Gift Card Details” and “Find out how,” both linking to a section on collecting the US$25 gift card. A link to decline the offer was at the bottom of the page.
In a written statement MemberWorks said, “We believe that MemberWorks has the most stringent pro-consumer policies of any company in our industry.”
Nevertheless, online shoppers will be wise to heed this old advice: Read the fine print.