FOR IMMEDIATE RELEASE
NEWS ADVISORY
May 26, 2015
For More Information, contact:
Luther Strange
Mike Lewis (334) 353-2199
Joy Patterson (334) 242-7491
Alabama Attorney General
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AG STRANGE ANNOUNCES $11 MILLION MULTI-STATE
SETTLEMENT WITH CLASSMATES INC., FLORISTS
TRANSWORLD DELIVERY INC. AND FTD.COM INC.
(MONTGOMERY) –Alabama Attorney General Luther Strange and the Attorneys
General of 21 other states announced today that Classmates Inc. (“Classmates”), along with
Florists’ Transworld Delivery Inc. and FTD.com Inc. (collectively “FTD”), have agreed to pay $11
million to settle allegations that the companies engaged in misleading advertising and billing
practices. This includes restitution to eligible consumers.
The Attorneys General allege Classmates and FTD engaged in misleading, unfair and
deceptive practices in violation of state consumer protection laws. Specifically, the Attorneys
Generals’ investigation focused on the companies’ relationships with third-parties who used
negative option marketing practices to sell membership programs to consumers doing business
online with Classmates and FTD. Negative option marketing is a sales practice in which a seller
treats a consumer’s failure to take an affirmative action, either to reject an offer or cancel an
agreement, as assent to be charged for goods or services.
These third-party marketers offered programs such as discount buying clubs and travel
rewards programs, often immediately after the consumer’s online transaction with Classmates or
FTD. Unbeknownst to the consumer, Classmates and FTD would share consumers’ personal
information, including credit card account numbers (a practice known as “data pass”) so that the
consumer could be billed for these offers if they did not cancel. Congress banned data pass in
Internet transactions in 2010 with the passage of the Restore Online Shoppers’ Confidence Act, 15
U.S.C. ß8401, et seq. A number of Attorneys General, including Alabama, settled similar
allegations against two of Classmates’ and FTD’s marketing partners – Webloyalty, Inc. and
Affinion Corp. – in late 2013. That settlement included a restitution fund for consumers in excess
of $19 million.
“Consumers’ financial information should never be shared without their knowledge and
consent,” said Attorney General Strange. “In addition, they should not be misled about whether
they have to take action to keep from being charged for something which they did not intend to
purchase. I am pleased that this settlement includes restitution for eligible consumers and that
important reforms will be put in place.”
Today’s agreement includes a number of requirements to ensure that consumers
knowingly consent to the purchase of any membership program offered by a marketing partner
of Classmates or FTD, including the following injunctive terms:
501 Washington Avenue * Montgomery, AL 36104 * (334) 242-7300
www.ago.alabama.gov Page 2 of 2
- A prohibition against misrepresenting the reason for requesting a consumer’s account
information.
- Classmates/FTD’s marketing partners cannot use FTD and Classmates’ names or
logos in the title of a membership program, and any offer must be made after the
consumers have concluded their transactions with Classmates or FTD, in order to
ensure that consumers understand they are receiving a separate and distinct offer from
a company other than FTD and Classmates. - Before consumers are transferred to a marketing partner to receive a trial offer, the
consumers must receive clear and conspicuous disclosures informing them that they
will be transferred to another site to receive a membership offer and the consumers
must consent to the transfer. - Classmates/FTD and its marketing partners cannot state an offer is “free” or “risk
free” if the offered program will convert to a paid subscription. - Classmates/FTD are generally prohibited from making misrepresentations and
material omissions, including making any misrepresentations concerning the reason or
purpose for which a consumer is receiving an offer for enrollment in a membership
program.
The Attorneys General also investigated Classmates’ renewal and cancellation practices in
connection with its own social network subscription services offered to consumers through its
website, Classmates.com. The Attorneys General allege Classmates failed to adequately inform
consumers that their subscriptions would automatically renew and made it difficult for
consumers to cancel their subscriptions. Under today’s settlement, Classmates has agreed to
make significant changes to its business practices, including more clearly disclosing to consumers
that their Classmates subscriptions will automatically renew and making it easier for consumers
to cancel their subscriptions.
Classmates and FTD denied any wrongdoing, but in order to settle the matter they agreed
to make an $8 million payment to the Attorneys General. Additionally, Classmates is
establishing a $3 million restitution fund to provide refunds to consumers who were enrolled into
Classmates’ subscription service without authorization or who experienced difficulty when
trying to cancel their Classmates subscriptions.
Alabama consumers seeking a refund from Classmates, who have not previously filed a
complaint with the Attorney General, may file a complaint with Attorney General Strange’s
Consumer Protection Section through the website, www.ago.alabama.gov, or by writing to 501
Washington Avenue, Montgomery, Alabama, 36104. Consumers may call toll-free to 1-800-392-
5658 for information. Complaints must be filed by 90 days after the settlement’s execution date,
when it is approved by the court. Consumers who previously filed complaints regarding
Classmates’ renewal and cancellation practices may also receive restitution under the settlement.
The States included in the settlement are Alabama, Alaska, Delaware, Florida, Idaho,
Illinois, Kansas, Maine, Maryland, Michigan, Nebraska, New Jersey, New Mexico, North Dakota,
Ohio, Oregon, Pennsylvania, South Dakota, Texas, Vermont, Washington and Wisconsin. The
states that led the investigation were Maryland and Kansas.
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