Data Sold By Classmates or FTD? You Could Get a Refund

Attorneys general in 21 states, including Michigan, have negotiated an $11 million settlement with the social networking site Classmates Inc. and the online floral delivery company Florists’ Transworld Delivery Inc. / FTD.com Inc. to resolve allegations the companies engaged in misleading advertising and billing practices.

Investigators allege Classmates and FTD developed third-party relationships with vendors that used negative-option marketing practices to sell membership programs to consumers doing business online with Classmates and FTD, Michigan Attorney General Bill Schuette said in a news release.

Negative option marketing is a sales practice in which a seller treats a consumer’s failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services.

These third-party marketers offered programs such as discount buying clubs and travel rewards programs, often immediately after the consumer’s online transaction with Classmates or FTD.

Without the consumer’s knowledge, Classmates and FTD would then 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 cancel. Congress banned data pass in Internet transactions in 2010 with the passage of the Restore Online Shoppers’ Confidence Act, Schuette said.

Classmates and FTD agreed to make an $8 million payment to the states as a part of the settlement. Additionally, Classmates is establishing a $3 million restitution fund to provide refunds to consumers who were enrolled into Classmates’ subscription service without authorization or who experienced difficulty when trying to cancel their Classmates subscriptions.

Protecting Consumers Going Forward

The agreement includes a number of terms to further protect future FTD and Classmates consumers going forward including:

• 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.

Classmates Renewal and Cancellation Practices

The investigation also included Classmates’ renewal and cancellation practices in connection with its own social network subscription services offered to consumers through its website, Classmates.com.

The allegations include that Classmates failed to adequately inform consumers that their subscriptions would automatically renew and made it difficult for consumers to cancel their subscriptions.

Under the 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.

How to File a Complaint for a Refund from Classmates

Consumers seeking a refund from Classmates, and who have not previously filed a complaint with the Department of Attorney General, may file an online complaint with Michigan’s Consumer Protection Team or by writing the Consumer Protection Division, P.O. Box 30213, Lansing, MI 48909 postmarked before Aug. 24, 2015.

Classmates’ restitution fund is designated to refund consumers who were enrolled into Classmates’ subscription service without their authorization or who experienced difficulty cancelling, during the period from Jan. 1, 2008-May 26, 2015.

Other states included in the settlement are Alabama, Alaska, Delaware, Florida, Idaho, Illinois, Kansas, Maine, Maryland, Nebraska, New Jersey, New Mexico, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Vermont, Washington, and Wisconsin.