400,000 Iowans eligible for refund after court ruling, Attorney - KWWL - Eastern Iowa Breaking News, Weather, Closings

400,000 Iowans eligible for refund after court ruling, Attorney General says

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DUBUQUE (KWWL) -

400,000 Iowans are receiving notices in the mail from Iowa attorney general Tom Miller that they're eligible for a refund from a $40 million fund tied to three buying club cases.

Based on the companies' records, the Attorney General's Consumer Protection Division determined which Iowans are eligible for a refund. Those people are receiving notices in the mail.

"We want Iowans to know that these notifications are legitimate, and payments will follow a few months from now," Iowa attorney general Tom Miller said.

Eligible Iowans will receive checks later this year, likely from October through December. Most refunds will range from $5 to $40, but some will be much higher. The refund amounts will depend, in part, on the number of consumers on the membership lists who can be located.

According to the Iowa Attorney General's office, the refunds include restitution from last year's unanimous Iowa Supreme Court decision against now-defunct Connecticut-based marketing company Vertrue Inc. The refunds also include payments from Affinions Group Inc., of Stamford, Conn. and Stonebridge Benefit Services Inc. of Plano, Texas.

"In the Vertrue case, the District Court and the Iowa Supreme Court both ruled that the company essentially based its business model on tricking Iowans into paying fees for memberships that most didn't know they had, they didn't use and didn't want," Miller said. "Now it's time for Iowans to receive the restitution that they're rightly entitled to."

Vertrue and its affiliates had enrolled nearly 864,000 Iowans since 1989. The Iowa Supreme Court found them guilty of committing consumer fraud and violating Iowa's Buying Club Memberships Law.

The ruling said, "The record is replete with examples of consumers who were unwittingly enrolled in Vertrue's financial, privacy, and health programs through the use of misleading solicitations and overreaching marketing tactics."

Vertrue marketed the memberships through phone calls, mailings and the Internet. The company said the membership would give customers various discounts on goods and services. The Iowa Attorney General's office said the companies often enrolled consumers who were responding to an offer, such as a cash-back offer or gift card, while making a separate purchase from a different merchant.

Vertrue enrolled consumers in trial memberships the customer had to cancel by a certain deadline. If they didn't, Vertrue would collect monthly membership fees though debit or credit charges that continued until consumers canceled their memberships.

The Iowa Supreme Court called Vertrue's sales pitch "incontestably deceptive and unfair."

In 2003, the Consumer Protection Division obtained a recorded phone call from Vertrue, in which one of the company's telemarketers offered a 70-year-old Des Moines widow a $25 Walmart gift if she'd opt into a buying club trial membership. Vertrue then billed the woman's credit card $14.95 per month. According to the Iowa Attorney General's office, the woman never used the membership and never received the Walmart gift card.

In its ruling, the Court added, "This unintelligible telemarketing pitch that proceeded at a lightening pace was likely to mislead consumers as to the material terms of the transaction."

In 2011, a Polk County judge ordered Vertrue to pay nearly $29 million in restitution. Last year, the Iowa Supreme Court raised the amount to $40 million.

After the District Court ruling, Miller sought and received a court order, requiring Vertrue to post a $32.6 million appeal bond. Despite Vertrue's bankruptcy filing in 2012, the state collected the appeal bond funds.

"Our priorities in these cases were to stop these companies from continuing to take advantage of Iowans, and we also wanted to ensure that Iowans affected by this would someday see at least some restitution," Miller said. "Now we're close to reaching that point."

In October, Affinion Group Inc. and its subsidiaries Trilegiant Corp. and Webloyalty.com agreed to pay the state $5.5 million to resolve Miller's allegations the company violated state consumer protection laws. The payment included $5 million in restitution to Iowa consumers.

Miller alleged the company misled Iowans into signing up and paying for discount membership programs through sponsored "free trials." Affinion and its subsidiaries run multiple membership programs offering a variety of services such as credit monitoring, roadside assistance, discounted entertainment and discounted travel.

Under the agreement, Affinion and its affiliates were required to change their marketing practices. Affinion did not admit to wrongdoing.

Also in October, a Polk County District Court judge ordered two companies affiliated with JCPenney to pay more than $2.7 million in refunds to tens of thousands of Iowa consumers enrolled in buying club memberships. The case involved JCPenney Direct Marketing Services and Stonebridge Benefit Services Inc.

A consent judgment required the companies to comply with Iowa's Buying Club Law and Consumer Fraud Act.

Iowans with questions or who want more information about the refunds can contact the settlement administrator directly. Information is available HERE: www.IowaBuyersClubRefunds.com or by e-mailing info@iowabuyersclubrefunds.com or by calling 1-866-989-8782.

Iowa Buyers Club Refunds

P.O. Box 1923

Faribault, MN 55021-1944

People can best protect themselves from fraudulent charges by reviewing credit card and bank statements carefully and regularly, and promptly disputing any unauthorized charges.

Miller warns people of trial offers, "free trial" offers and membership offers. He said people should get the details and ask questions.

"Will you be billed automatically if you don't cancel? By when must you cancel? How do you cancel?" are suggested questions, as well as, "Will you receive a mail notice?"

Also, Miller encourages people to watch their mail and e-mail account for notices that someone will be billed unless he or she cancels. These mailings may look like junk mail or spam.

For more information on buying clubs or to file a complaint, contact the Consumer Protection Division through the Attorney General's website HERE: www.IowaAttorneyGeneral.gov or via e-mail at consumer@iowa.gov.

People can also call the Consumer Protection Division at 515-281-5926, or outside the Des Moines area, toll free, at 1-888-777-4590.

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