The Maryland attorney general's office signed on to an $11 million settlement Tuesday with the websites Classmates.com and floral delivery company FTD that resolves allegations that the companies duped customers into buying memberships they didn't want.
The attorneys general for Maryland and 21 other states alleged that FTD and Classmates, a social networking site for people who attended high school together, violated state consumer protection laws by allowing third parties to charge online customers who failed to expressly opt out of a membership program.
The attorneys general said that the practice is known as negative-option marketing and that as many as 89 percent of the Classmates customers had unknowingly signed up for memberships with third parties.
"This is a suspect sales practice that often goes unnoticed by customers who end up paying for something they never wanted," Maryland Attorney General Brian E. Frosh said in a statement. "Consumers should always carefully review service agreements or other add-on offers when making a purchase to ensure there are no strings attached."
The membership programs, to discount buying clubs or travel rewards programs, were offered by third parties after the customer's online purchase with Classmates or FTD. Classmates and FTD would allegedly share the customer's credit card account number with the third-party marketers. The attorneys general also alleged that Classmates made it difficult for subscribers to cancel and did not adequately disclose that the subscription would automatically renew.
Classmates and FTD will pay $8 million to the 22 states, and Classmates will establish a $3 million restitution fund for customers who were enrolled into its subscription service without authorization or who had difficulty canceling their subscriptions.
Marylanders seeking a refund from Classmates should file a complaint with the Office of the Attorney General Consumer Protection Division or call 410-528-8662 by August 26, 2015.