Office of Maryland Attorney General J. Joseph Curran, Jr.

October 24, 2001 Media Inquiries: Sean Caine 410-576-6357

"Free Trial Memberships" Resulted in Unauthorized Credit Card Charges

Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division, along with those of more than 40 other states, has entered into a Consent Order with Triad Discount Buying Service Inc., related companies, and their operator, Ira Smolev, all of Boca Raton, Florida. The Order requires Triad to pay more than $8.3 million in restitution for allegedly violating the Maryland Consumer Protection Act by charging consumers for "buying club" memberships without their authorization.

The states alleged that consumers were deceived when they called to order merchandise advertised on television. During the call, they were told that in addition to their purchase, they could receive a free 30-day membership in a buying club and enjoy savings on other items. When consumers agreed to have membership materials sent to them, and even in many instances when they did not agree, their names and credit card numbers were provided by the telemarketers to the Triad companies. Within 45 days, the Triad companies charged membership fees of up to $96 to the consumers' credit cards without their authorization.

"A sale is not valid unless consumers are fully informed of the terms of purchase, and expressly authorize the sale," said Curran. "Using a free trial offer to get access to a consumer's credit account and make unauthorized charges is trickery and fraud."

The $8.3 million in consumer restitution will be distributed among approximately 275,000 individuals nationwide, pending court approval. There are more than 6,000 eligible Maryland consumers.

In addition, Smolev, as well as the Triad companies, which are currently in bankruptcy court, are required to revise their marketing practices to avoid future deceptions. Included in those changes are prohibitions against misrepresenting offers of goods or services as "free" and failing to disclose any obligations of consumers in accepting trial offers. The companies are also prohibited from signing up new members or renewing existing memberships without express, verifiable authorization from the consumer, and from obtaining or disseminating consumers' personal billing information, including credit and unique identifying information, without authorization. The companies must also abide by the provisions of the Maryland Telephone Solicitations Act.