December 15, 2003
GENERAL'S OFFICE SETTLES WITH COMPANY OVER "UPSELLING"
OF PRE-PAID LEGAL SERVICES PLANS
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
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.