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Geoff Greenwood, Communications Director
515-281-6699, geoff.greenwood@iowa.gov
FOR IMMEDIATE RELEASE, September 6, 2013

California Online Merchant to Refund Iowa Consumers

 

(DES MOINES, Iowa)  A California-based online company that operates a sports activities and fitness website, and sells memberships for merchandise and services discounts, has agreed to pay refunds to Iowans and change its marketing practices, under an agreement with Attorney General Tom Miller.

The Active Network, Inc. of San Diego, California, which operates Active.com, will pay $237,167.42 in refunds to Iowans who had been charged for membership programs.  In addition to handling registrations for running events and other athletic events, the company sold various related products such as running shoes and other gear through its website.

“We allege that when many consumers registered online for a sports-related activity like a marathon, a 5K run, or even a soccer camp or little league, the company enrolled them as members of the ‘Active Advantage’ membership program,” Miller said.  “The company charged an annual $59.95 membership fee, which showed up on credit card or bank statements.”

More than 9,500 Iowans paid at least one $59.95 membership charge, and about half that many challenged the charge and obtained a refund.  But a negative option arrangement meant that any unknowing member who didn’t challenge the charge kept getting billed year after year.

“Some consumers complained that they did not know they had been enrolled, and unwittingly paid hundreds of dollars over the course of several years for a membership they didn’t want and didnt use,” Miller said.

According to Miller, a consumer completing an online registration would be congratulated and told to click YES to claim a rebate on their fee, or to claim a free ‘thank you’ gift for registering online.  By clicking YES, consumers subjected themselves to enrollment and membership charges that the company had not properly disclosed.
The agreement, called an Assurance of Voluntary Compliance, requires The Active Network to comply with Iowas Buying Club Law in connection with any future enrollments.  In addition to the $237,167.42 payment for refunds, the agreement also required a $15,000.00 payment to the state for consumer fraud enforcement.  The company denied liability in the agreement.

“Our Consumer Protection Division reports that this problem – consumers getting hit with charges for memberships they never purposely enrolled in – has become a serious problem,” Miller said.  “These stealth enrollments often occur online, as they did here, but sometimes they stem from a telephone pitch.  Either way, consumers can protect themselves by checking over their credit card and bank statements carefully, and challenging unauthorized charges.”

The agreement required the company to provide a membership list to the Consumer Protection Division, which will be used to make refunds.

“Free Trial Offer” & Buying Club Tips

  • Be wary of trial offers, “free trial” offers, and membership offers.  Get the details and ask questions.  Will you be billed automatically if you don’t cancel?  By when must you cancel?  How do you cancel?  Will you receive a mail notice?  Remember, they already may have your bank or credit card number to charge you.
  • Examine your credit card bills every month, your checking account and debit card statements, other financial accounts, and phone bills.  Watch for unauthorized charges, and dispute them at once, in writing.
  • Watch your mail and email for notices that you will be billed unless you cancel.  These mailings may look like junk mail or spam.
  • Beware of cashing a check that comes in the mail with a “free trial offer.”  The fine print may obligate you to future payments.

For more information or to file a complaint, contact the Attorney General’s Consumer Protection Division through the Attorney General’s website at www.IowaAttorneyGeneral.gov or email directly to consumer@iowa.gov.  Consumers can also call the Consumer Protection Division at 515-281-5926, or outside the Des Moines area, toll free, at 1-888-777-4590.

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