A Polk County District Court judge has ruled a Connecticut company used deceptive and unfair practices to defraud nearly 500,000 Iowans out of $36 million. Iowa Attorney General Tom Miller calls it one of the biggest consumer protection cases ever won by his office. Miller says Vertrue, Incorporated marketed “buying club” memberships at a cost of around $10 to $20 a month.
Miller says most consumers didn’t realize they were members and were being charged through their credit card or bank accounts. Mary Grefe of Des Moines was a victim and testified during the trial. The 87-year-old former teacher and school board member signed up for what she thought was a free credit report offer online, but then noticed a charge on her credit card for $9.99 to Privacy Matters.
“I inquired what this was and they said it was related to my credit report,” Grefe said. “I ordered a credit report and thought it was free, but maybe I was mistaken so I paid the $9.99.” Grefe believed that would be the end of the matter, but the charges kept coming. “I continued to get bills and they increased to $29 on three credit cards,” Grefe said. “I kept refusing to pay, so they kept saying your credit report is getting worse.”
Miller says Vertrue’s buying club memberships were sold to Iowans through telemarketing, direct mail and the internet over nearly two decades. In most cases, consumers had called their credit card company or ordered a product advertised on T.V. and then agreed to a “risk-free membership” of some kind. If the consumer failed to cancel the membership at the end of the trial period, their credit card was charged.
“If you see anything for free on your computer, believe me, it is not free,” Grefe said at a news conference at the Attorney General’s office. “It’s just a way for them to get ahold of your credit cards.” Miller said his office will seek full restitution of the $36 million and pursue civil penalties against Vertrue and its subsidiary companies.