FTC Begins Distributing Redress Checks to Purchasers of Buying Club Memberships

The Federal Trade Commission has begun distributing refund checks to over 243,000 consumers who allegedly were misled into accepting trial club memberships from a group of buying clubs including Triad Discount Buying Service, Inc. Over $8 million will be distributed to consumers nationwide over the next few weeks. The FTC said that consumers who sought refunds from the companies or filed complaints with the FTC or the states will receive a refund that equals about one-third of the cost of the membership.

The refunds are the result of a lawsuit filed in 2001 by the FTC and state Attorneys General against a group of buying clubs including Triad Discount Buying Service Inc., a Boca Raton-based business, its related companies and their operator, Ira Smolev. The FTC charged that the defendants misled consumers into accepting trial club memberships and obtained consumers' billing information from telemarketers without the consumers' knowledge or authorization. Consumers then were enrolled in the clubs and charged from about $49 to $96 in yearly membership fees. On November 21, 2001, a U.S. District Court in Florida entered a stipulated final judgment against the defendants for $8.3 million in redress, and permanently prohibited them from misrepresenting "free" offers of goods and services and failing to disclose any consumer obligations by accepting trial offers. The defendants also are prohibited from obtaining consumers' personal billing information, including credit and unique identifying information, without authorization, or disseminating the information. More than 40 states participated in the multi-state investigation, led by Florida and Missouri, and entered into the agreement.