ATTORNEY GENERAL'S OFFICE SETTLES WITH COMPANY OVER "UPSELLING" OF PRE-PAID LEGAL SERVICES PLANS

Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has reached a settlement with Advisory Communications Systems, Inc., a Lanham, Md., company, over that company's telemarketing sales of pre-paid legal services memberships to consumers. Advisory Communications Systems has agreed to change its telemarketing sales practices and to refund money to consumers who were billed for memberships without proper authorization.

Advisory Communications Systems sells memberships in its "LawPhone" pre-paid legal service, for which the consumer is billed $16.95 monthly. One method the company formerly used to solicit customers was "upselling," whereby consumers who called in response to an advertisement for another product were offered a trial LawPhone membership at the conclusion of the call, supposedly to thank the consumer for the original purchase. Consumers who did not cancel the memberships during the trial period were then charged on the credit card they had used to purchase the item about which they had called. The Division received complaints from a number of consumers who complained that charges appeared on their credit card statements for a LawPhone membership when they had not authorized the charges.

The Division alleged that the company violated the Consumer Protection Act and the Maryland Telephone Solicitation Act by misrepresenting facts and omitting material facts during the telephone "upsell," charging consumers' credit cards without their authorization, and failing to honor requests for cancellations and refunds.

Under the settlement, Advisory Communications Systems denies that it has violated Maryland law or committed unfair or deceptive trade practices and states that it had previously ceased using "upsells" to sell its memberships. It has agreed that during future telephone solicitation of its pre-paid legal services, it will clearly disclose the terms and conditions of the offer, including the price and how frequently a consumer will be charged, and whether the company already possesses billing information for the consumer's credit card or other account. If a trial period is offered, the company must make it clear that the consumer will be charged if he or she does not cancel during the trial period, and say how the consumer can make a cancellation request. The company may not represent that a trial period is provided to the consumer as a gift or to thank the consumer for prior business. The company also agreed to obtain a written contract in accordance with the Maryland Telephone Solicitation Act before charging the consumer for a membership.

"Consumers should not be charged for a product without providing informed authorization," said Curran. He also advised consumers to scrutinize their charge bills to ensure that all of the charges were authorized.

Advisory Communications Systems will pay more than $190,000 in restitution to consumers who were charged for a LawPhone membership through an "upsell" and who did not access the service after the initial trial period. It will also pay $75,000 to the Division.

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