The Iowa Supreme Court has upheld and increased the penalty against a company accused of taking advantage of the elderly with its buying club memberships. A district court ruling found that Vertrue Incorporated of Delaware used marketing practices that violated the Iowa Buying Club Membership Law and Consumer Fraud act in a suit brought by Iowa’s Attorney General.
The company had signed up nearly 864,000 Iowans since 1989. The district court found the company targeted the elderly with what are called negative options.
That’s where you sign up for a free trial for a service and you will keep getting billed for the service once the trial expires unless you specifically ask that it be stopped. Prosecutors said the elderly often didn’t see the fine print that they had to cancel the services, or did not understand the information given over the phone.
The judgment said Vertue had to pay over $25-million in restitution, $2.8-million in civil penalties and $725,000 in court costs. The company appealed the ruling, saying its practices did not target the elderly and did not violate Iowa law.
See the ocmplete ruling here: Vertrue ruling PDF
The Iowa Supreme Court ruling says the evidence clearly shows the company targeted the elderly and the marketing practices do violate Iowa law. The court also refigured the civil penalties and raised the amount by $180,000 to an even $3-million.