Ticketmaster, Pizza Hut, Orbitz, Shutterfly, and Movietickets Must Also Pay Millions Collectively and Reform Practices in Connection with Scheme

CUOMO SECURES AN ADDITIONAL $8.5 MILLION IN SETTLEMENTS WITH COMPANIES THAT TRICKED CONSUMERS INTO SIGNING UP FOR DISCOUNT CLUBS WITH HIDDEN FEES Webloyalty Will Provide Full Refunds to Consumers Who Were Duped While Shopping Online Ticketmaster, Pizza Hut, Orbitz, Shutterfly, and Movietickets Must Also Pay Millions Collectively and Reform Practices in Connection with Scheme

Cuomo Has Obtained Over $18 Million in Refunds, Penalties, and Fees Through Investigation into Discount Clubs

NEW YORK, NY (September 21, 2010) - Attorney General Andrew M. Cuomo today announced that he has secured an additional $8.5 million in settlements with companies that tricked countless New York consumers into signing up for discount clubs that charged hidden fees.  With today’s settlements, Cuomo’s wide-ranging investigation into the discount club industry has garnered over $18 million in consumer refunds, penalties, and fees.

Under a settlement with discount club marketer Webloyalty.com, Inc. (“Webloyalty), the company will refund defrauded consumers who were charged unauthorized fees and will also pay $5.2 million in penalties, costs, and fees.  Separately, the Attorney General obtained settlements with five retailers who have partnered with Webloyalty: Ticketmaster LLC; Pizza Hut, Inc.; Orbitz Worldwide, LLC; Shutterfly, Inc.; and MovieTickets, Inc.  The settlements require the retailers to collectively pay over $3.3 million for consumer refunds, education, and fees, and require that they reform their marketing arrangements with discount club sellers.

The Attorney General’s investigation into the discount club industry found that when consumers completed online purchases from familiar retailers, they were often presented with a cash-back or discount offer from a marketer like Webloyalty.  Information about accepting the offer and its ramifications - including the fact that the consumer was agreeing to transfer his or her credit or debit card account information - was buried in fine print and cluttered text.  Since consumers were not required to provide their financial information as part of the enrollment process, they often accepted the offer without knowing they were joining a fee-based program.

Once enrolled in a discount club, recurring charges begin to appear on consumers’ credit or debit card from unfamiliar companies.  Due to their low dollar amount or the non-specific club names on consumers’ account statements, the charges often go unnoticed.  

“In this all too common Internet scheme, consumers were tricked into paying for monthly services for a discount club while shopping online at trusted retailers,” said Attorney General Cuomo.  “I urge New Yorkers who make purchases online to be wary of cash-back or discount offers, which often leave consumers with more than they bargained for.”

According to the settlement, Webloyalty must:

• Fully refund fees charged to certain consumers who unknowingly enrolled in or did not authorize billing for Webloyalty discount clubs and programs
• Permanently end its practice of obtaining consumers’ billing information from online partner retailers
• Reform its online marketing practices to ensure consumers understand they are enrolling in a program offered by Webloyalty for which they will be billed
• Make redemption forms for rebates immediately available to consumers online

Last month, Cuomo obtained more than $10 million in settlements with Affinion Group, Inc., its subsidiary Trilegiant, and other retailers engaged in discount club schemes.  Discount clubs generate billions of dollars each year, much of which has been amassed through fraud, and retailers have obtained millions of dollars in revenue for passing customers’ credit card information to the programs.  Webloyalty is one of the largest companies active in marketing fee-based discount clubs and protection benefit programs.

SETTLEMENTS WITH RETAILERS

In addition to the settlement with Webloyalty, the Attorney General announced settlements today with several retailers that have partnered with Webloyalty.  According to these settlements, the retailers will reform their marketing practices, permanently end the practice of providing consumers’ billing information to companies that market discount clubs online, and collectively contribute more than $3.3 million to a fund that will pay for consumer education, refunds, and the costs of the investigation.  

The retailer settlements and amounts are as follows:

Orbitz:		$1,200,000
Shutterfly, Inc.:		$952,200
MovieTickets.com, Inc.:		$681,283
Ticketmaster, L.L.C:		$455,000
Pizza Hut, Inc:		$78,750

The Attorney General has received numerous complaints from New Yorkers who have incurred unauthorized charges from companies that market discount clubs.  These programs may offer actual discounts and other protection benefits, but consumers are often unaware that they are even enrolled in the programs.  This investigation is ongoing.

CONSUMER INFORMATION

Any consumer who finds unauthorized charges on their account statements should call the number listed on the statement and demand a full refund.  Most consumers who were enrolled in a Webloyalty membership program since September 30, 2008 will be receiving notice of the settlement and claim forms over the next several weeks and may obtain a refund through that process.  Consumers who were enrolled in an Affinion or Trilegiant program should have received a claim form already in connection with the companies’ settlement with the Attorney General.  

Charges for Webloyalty programs may appear on consumers’ credit or debit card account statements as “WLI,” followed by the name of one of the following programs: Reservation Rewards; Shopper Discounts and Rewards; and Complete Savings.

Consumers who discover unauthorized charges from companies that market discount clubs other than Webloyalty or Affinion or its subsidiary Trilegiant (whose charges may appear on their account statement as “TLG” followed by the name of the discount program), such as Vertrue (whose charges may appear on account statement as “AP9,” “MVQ,” or the name of the discount program) should cancel their membership with the program and/or request a refund.  Any consumers who discover unauthorized charges from Webloyalty or Affinion/Trilegiant but did not receive a claim form should also cancel their membership with the program and/or request a refund.

Consumers should carefully review their credit and debit account statements each month to ensure that all charges have been authorized.  Consumers should also carefully read the fine print provided with any discount or service offers, especially when shopping online.  Consumers should not cash unsolicited checks that come in the mail without carefully reading any fine print that appears on the front or back of the check, as well as any materials that accompany the check.  

If consumers believe they have been defrauded by a discount club or program, they should contact the Attorney General’s office at 1-800-771-7755 or www.ag.ny.gov

This investigation was led by Special Deputy Attorney General for Consumer Frauds & Protection Joy Feigenbaum and was handled by Assistant Attorney General Amy Schallop, Special Counsel Carolyn Fast, and Assistant Attorney General Harkiranjit Chahal, under the direction of Deputy Attorney General for Economic Justice Michael Berlin.