Classmates/FTD Inc. To Payout $11M Under New Settlement
Kansas and Maryland led an investigation into FTD, the floral delivery company, and Classmates Inc, a social networking company. The two will pay a combined 11 million dollars to consumers who lost money due to their business practices. KMUW'a Aileen LeBlanc reports...
Attorney General Derek Schmidt announced today that Classmates, Inc., along with Florists’ Transworld Delivery, Inc. and FTD.com Inc. (collectively “FTD”) have agreed to pay refunds to consumers who lost money because of the companies' misleading advertising and billing practices.
Kansas and Maryland led a group of 22 state attorneys general in the investigation of the companies' practices. The attorneys general allege Classmates and FTD engaged in misleading, unfair and deceptive practices in violation of state consumer protection laws resulting in charges the consumers did not intend to incur.
Tuesday’s agreement includes 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:
A prohibition against misrepresenting the reason for requesting a consumer’s account information.
- Classmates/FTD’s marketing partners cannot use FTD and Classmates’ 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, in order to ensure that consumers understand they are receiving a separate and distinct offer from a company other than FTD and Classmates.
- Before consumers are transferred to a marketing partner to receive a trial offer, 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.
- Classmates/FTD and its marketing partners cannot state an offer is “free” or “risk free” if the offered program will convert to a paid subscription.
- Classmates/FTD are generally 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.
“Consumers have a right to know what services they are signing up for and to be clearly informed about the cost of those services,” Schmidt said. “This settlement represents our continued efforts to return money to consumers for charges they didn’t know they were signing up for and were often unable to cancel.”
Under today’s settlement, Classmates has agreed to make significant changes to its business practices, including more clearly disclosing to consumers that their Classmates subscriptions will automatically renew and making it easier for consumers to cancel their subscriptions.
The Classmates settlement includes a restitution program for eligible consumers. Kansas consumers who were enrolled in a Classmates subscription service without authorization or who experienced difficulty when trying to cancel their subscription, since January 1, 2008, should file a complaint with the attorney general’s office consumer protection division online at www.InYourCornerKansas.org or by calling 1-800-432-2310. Complaints must be filed within 90 days to meet eligibility requirements. Consumers who previously filed complaints regarding Classmates’ renewal and cancellation practices may also receive restitution under this settlement.
Kansas and Maryland led this investigatory effort along with attorneys general from Alabama, Alaska, Delaware, Florida, Idaho, Illinois, Maine, Michigan, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Vermont, Washington and Wisconsin.