HARTFORD (CN) - Led by Trilegiant Corp., major banks and retailers "conspired to defraud hundreds of thousands of consumers" by cramming their credit cards for unauthorized "subscription services," a RICO class action claims in Federal Court.
Lead defendants in the 90-page racketeering complaint are Trilegiant, its parent company the Affinion Group, and their "controlling owner," Apollo Global Management.
Banking-credit card defendants include Bank of America, Capital One, Chase Bank, Citibank and Wells Fargo.
Retail-online defendants include Orbitz, PeopleFindersPro, Days Inn, Hotwire, United Online, IAC/Interactive, Buy.com and Priceline.
Lead plaintiff David Frank says: "This action is brought to redress the shocking behavior of some of this country's largest companies, which have combined and conspired to defraud hundreds of thousands of consumers into paying for 'club' memberships and subscription services that the consumer never authorized. Each participant in this scheme profited handsomely from its participation, and each participant knew that the particulars of the scheme would result in consumers being defrauded.
"The 'cramming' of charges for unwanted memberships and services that is the subject of this lawsuit has already been determined by the United States Senate Committee on Commerce, Science and Transportation (the 'Senate Commerce Committee') and New York Attorney General, after extensive investigation, to be a fraud."
Citing a Nov. 16, 2009 report, the class claims: "'Hundreds of e-commerce merchants-including many of the best known, respected websites and retailers on the Internet-allow these companies to use aggressive sales tactics against their customers, and share in the revenues generated by these misleading tactics.' What occurred, and continues to occur, is white-collar racketeering, plain and simple." (Citation to Senate report omitted.)
The class claims that "the scheme was initiated by defendant Trilegiant Corporation," with its corporate parents, Affinion and Apollo, "but the scheme also required Internet e-commerce merchant partners and the willing participation of credit card companies," who "colluded" with Trilegiant.
"Trilegiant started the scheme by creating so-called 'membership' and discount 'clubs,'" the complaint states. "Trilegiant sold these products, which have no real value, to consumers through an insidious set of business practices. Trilegiant carefully crated its scheme to exploit known consumer tendencies in order to create consumer confusion and ultimately defraud consumers into paying 'membership' fees to such 'clubs' for which the consumers never even realize they signed up.
"Trilegiant's business practices are well-known to the e-merchant defendants (as well as the broader e-merchant community) and defendant credit card companies, each of which is an essential part of Trilegiant's fraudulent scheme. Trilegiant requires the complicity of the e-merchant defendants for its scheme to succeed, and Trilegiant pays them handsomely to participate in the scheme to defraud. Trilegiant secures the participating of the e-merchant defendants by contracting with them to approve Trilegiant's practice of interpolating itself into the checkout practice when consumers, such as plaintiff, are completing an online purchase. As explained by the Senate report, '(i)n exchange for bounties or other payments, reputable online retailers agree to let Affinion  sell club memberships to consumers are they are in the process of buying movie tickets, plane tickets or other online goods and services. The sales tactics used ... exploit consumers' expectation about the online 'checkout' process.'" (Parentheses, empty brackets and ellipsis in complaint; citation to Senate report omitted.)