Class Action Alleges Online Fraud | Courthouse News Service
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Class Action Alleges Online Fraud

CHICAGO (CN) - United Marketing Group conspired with three online stores to defraud customers by "enrolling" them in "membership programs" without their knowledge and billing them monthly, in exchange for nothing in return, a class action claims in Cook County Court. The alleged conspirators include Permission Interactive, Pike's Peak Direct Marketing and Taylor Gifts.

The class claims that after buying something through one of the online merchants, the retailers gave their bank card information to United Marketing Group (UMG), which charged them from $10 to $20 per month for so-called membership programs, which provided them nothing in return.

"UMG purports to sell negative-option membership programs" or "membership programs," according to the complaint. UMG claims that this provides consumers with discounts and benefits at a "variety of companies."

In reality, UMG gets credit- or debit-card information from merchants after a customer buys something from an online store, then charges a monthly fee without the customer's knowledge authorization, according to the complaint.

"In thousands of instances, consumers are entirely unaware they have been deceptively or fraudulently enrolled in a UMG Membership Program and, as a result, consumers - though repeatedly billed by UMG - get nothing in return."

Because UMG's fraudulent charges are relatively small, customers often do not notice them for months, the class claims. First, UMG enrolls its victims in a 30-day trial membership for $1, then charges them from $10 to $20 per month, according to the complaint. The class claims that UMG's "membership programs," in most cases, are entirely unrelated to their original retail transaction.

When a customer discovers the fraud, UMG will cancel the service, but will not provide refunds, the class says.

It adds that after Permission, Pike's Peak or Taylor transmit a customer's account information to UMG, the online retailers receive "a share of the charge and thereby profit from each unauthorized charge."

Yet the companies tell their customers that they do not know how UMG got ahold of the confidential billing information, the class claims.

Sometimes UMG enrolls a consumer in more than one membership program at a time, the class claims.

Named plaintiff Janet Casinover says that in August 2009 she bought a "Potty Patch" for her dog through Permission Interactive and gave the company her debit card number. In February this year, she noticed two separate, recurring charges on her bank statements: "UMG*EDGE" and "UMG*MYAD," each for $14.95.

Casinover says she called UMG several times, was always placed on hold, and eventually had to cancel her debit card, according.

Three other named plaintiffs say they managed to cancel enrollment in the UMG membership programs, but were denied full refunds.

The class demands damages for consumer fraud, deceptive business practices, breach of contract, unjust enrichment, conspiracy and violations of the Automatic Contract Renewal Act.

Lead counsel is Christopher Dore with Edelson McGuire.

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