Chase Bank and Trilegiant to Pay $14.5 million Over Deceptive Marketing

Pennsylvania Attorney General Tom Corbett announced Monday multi-state settlements totaling $14.5 million with Chase Bank USA, Chase Home Finance LLC and Trilegiant Corp. resolving allegations that the companies deceived consumers into paying for membership programs that claimed to offer discounts on automotive service, home repair, shopping and other consumer services.

Corbett said that Chase Bank and Trilegiant were accused of offering “free” or “no obligation” trial memberships to various discount programs without adequately informing consumers that they would automatically be charged various membership fees if they did not cancel within a certain period of time

“Consumers believed these offers were coming from Chase, and many thought they were getting rebates or consumer rewards,” Corbett said. “Instead, their credit cards or mortgages were automatically billed for memberships in clubs that consumers may never have known about.”

Corbett said the membership offers that were sent to consumers often included a small check, between $2 and $10, which many consumers believed were rebates or rewards. When consumers cashed the checks they were automatically enrolled in various discount clubs and billed fees, ranging from $49 to $99 or more, if they did not cancel the membership during a “free” trial period. The membership fees were charged to consumers’ credit cards or mortgage loans.

Corbett said that between January 2003 and October 2005, 319,532 Pennsylvania consumers cashed checks that were included in offers sent by Trilegiant. Some consumers may have unknowingly enrolled in memberships for multiple clubs.

According to the complaint, the mailings were sent by Trilegiant but appeared to come from financial institutions and other entities, featuring their names and logos on the envelopes and letterhead. Additionally, Chase allowed Trilegiant to use listings of Chase customers to market the club membership offers.

Corbett said the membership programs marketed to consumers by Trilegiant and Chase included AutoVantage Gold Service, AutoVantage Service, Buyers Advantage Service, CompleteHome Service, Pet Privileges Service, Shoppers Advantage Service, Travelers Advantage Service and numerous others.

As part of the settlement, Chase and Trilegiant do not admit any wrongdoing but do agree to take a series of steps to protect consumers from confusion and deception in any future solicitations, including:

• Clear and conspicuous disclosures regarding the terms of membership offers.
• Refraining from representing that a check or a non-check promotion is a refund, rebate or consumer reward.
• Sending membership materials and renewal notices that clearly explain all charges, terms and cancellation policies.
• Additionally, Trilegiant is required to send renewal notices to consumers who currently have active memberships, advising them that they have purchased a membership and explaining how to cancel the membership, if they wish.

Corbett said the $14.5 million settlement with Chase Bank and Trilegiant affects consumers in Pennsylvania and 16 other states. The settlement is open to consumers who have already filed complaints with the Attorney General’s Office as well as consumers who file complaints over the next nine months.

Corbett said the settlement includes separate agreements with Trilegiant and Chase. Trilegiant is required to pay a combined $8.325 million in restitution to consumers, while Trilegiant and Chase also will pay $6.175 million to the settling states to cover civil penalties, legal costs and fees.

Corbett urged Pennsylvania consumers who believe they are victims of this deceptive marketing program to call the Attorney General’s Bureau of Consumer Protection, at 1-800-441-2555, to file a complaint. Consumers can also file a complaint online using the Attorney General’s website, www.attorneygeneral.gov, or print a complaint form which can be mailed or faxed to the Attorney General’s Office.

Corbett also suggested that consumers monitor their monthly credit card and mortgage statements to check for unauthorized charges, including charges for membership clubs. Consumers should contact their credit card or mortgage company to dispute any unauthorized charges, and also file a complaint with the Attorney General’s Bureau of Consumer Protection.

In addition to Pennsylvania, the settlement includes Alaska, California, Connecticut, Illinois, Iowa, Maine, Michigan, Missouri, New Jersey, North Carolina, Oregon, Tennessee, Vermont and Washington. Louisiana and Ohio have also announced a settlement with Trilegiant.

The settlement included 20 membership clubs.

The agreement was filed in Commonwealth Court by Senior Deputy Attorney General Jesse Harvey and Deputy Attorney General Amy Schulman of the Attorney General’s Bureau of Consumer Protection.