(CN) – Classmates.com and FTD will pay $11 million to settle 22 states’ claims the companies misled and unfairly billed customers, South Dakota’s attorney general said.
The states claimed the companies allowed third-party marketers to offer discount buying clubs and travel rewards after users completed a transaction. But Classmates.com and FTD also shared users’ personal information – including credit card account numbers – without the users’ knowledge to the third parties could bill for the services when the users didn’t cancel, South Dakota Attorney General Marty Jackley said.
Classmates.com also neglected to inform its users that their subscriptions would automatically renew and made it difficult for users to cancel, Jackley said.
In addition to the $11 million settlement, the companies agreed to inform users when they are being transferred to a third-party offer site and all parties involved are forbidden from using the words “free” or “risk free” if the offer will eventually convert to a paid subscription.
Classmates.com also agreed to inform customers that their subscriptions will automatically renew and will make it easier for users to cancel when they’re no longer interested in being part of the social network.
The 22 states will share the $11 million payout. South Dakota’s share is nearly $185,000, Jackey said.
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