CHICAGO (CN) - A class action claims J.C. Penney is in cahoots with a deceptive marketing company, Stonebridge Benefit Services, which has a terrible record of "deceptively and without authorization charg(ing) tens of thousands of consumers millions of dollars" for its bogus "membership programs."
Lead plaintiff Bernadine Sims sued Stonebridge and J.C. Penney in Cook County Chancery Court.
Plano, Texas-based Stonebridge "deceptively enroll consumers in Membership Programs without their consent" by offering "free trials" and "fictitious rebate programs," the class claims.
Sims says Stonebridge partners with large retailers, such as Penney's, to get their customers' confidential credit card information, which Stonebridge uses to enroll the unwitting consumers in "Membership Loyalty Programs" without their knowledge.
The complaint states: "Preacquired account marketing is a simple concept: a consumer purchases a product from the retailer either online or over the phone; thereafter, the retailer 'shares' the consumer's billing and contact information with a business partner so that it may market its own product, usually a monthly membership program providing discounts. This sharing of consumer information is commonly referred to as 'data pass.' The retailer or 'merchant partner' who originally acquired the billing information is paid a fee by the third party for every person who is willingly or unwillingly enrolled in that third party's program. However, because the third party receives the consumer's billing information, preacquired account marketing is open to extensive abuse in the form of charges stemming form unauthorized enrollment charges beyond what was authorized.
"The majority of consumers to not consent to the sharing of their information in this manner, and more often than not are completely unaware that a merchant has transferred their information to a third party or that they have become enrolled in a recurring monthly membership program by that third party. In contrast, third party sellers and their merchant partners are completely aware of and act in concert to specifically design the deceptive business model at issue in this case."
Stonebridge has a slew of "membership programs," with catchy names such as "Savings2Go, PlanPlus, LeisurePlus, Everyday Bargains, Backporch, Savings Solutions, Fun Family Rewards, Fun Family Select, Perfect Home Rewards, and Perfect Home Select (collectively referred to herein as the 'membership programs'). Defendant Stonebridge has received thousands of complaint from consumers related to each of its membership programs," according to the complaint.
The class claims that Stonebridge's so-called "free trials" are actually negative-option memberships, which consumers must take the trouble to cancel to avoid being charged repeatedly, which they often do not know they have "signed up" for, and which seldom sends the complimentary gifts they promise.
"J.C. Penney has a vested interest in perpetuating and expanding the fraud that defendant Stonebridge perpetrates on consumers" because Penney gets a percentage of the money Stonebridge extracts from each of its victims, the class claims.
Penney's large catalogue business makes the scheme lucrative: "After a customer orders by telephone, defendant J.C. Penney's telemarketers enroll the customer in one or more of the Membership Programs without the customer's express and informed consent. The telemarketers are trained to speak quickly, and use a uniform script that fails to fully disclose the terms and conditions of enrollment in the Membership Programs. Defendant J.C. Penney and its telemarketers do not obtain the informed consent of consumers before enrolling them in the Membership Programs, and even enroll customers against their wishes.
"After consumers place online orders, defendant J.C. Penney uses negative option billing and fictitious rebate offers to deceptively enroll consumers in Membership Programs without their consent. Importantly, whether by negative option or by fictitious rebate offer, defendant J.C. Penney does not disclose the full terms of enrollment in its Membership Programs to its online customers.
"Whether ordering by phone or online, customers do not need to provide their contact and billing information to defendant Stonebridge for a Membership Program because defendant J.C. Penney has already done so. Further, defendant J.C. Penney is fully aware that its customers are not fully informed of the terms of enrollment in the Membership Programs, and do not consent to the enrollment."
Sims says she was auto-enrolled in the LeisurePlus Membership program after she used her J.C. Penney credit card in a telephone order. She says she was contacted by a Stonebridge telemarketer who offered her a 6-month trial membership that could be canceled at any time. She says Stonebridge continued to charge her a monthly enrollment fee after the "free trial" expired.
"After realizing she had been auto-enrolled without her permission, she attempted to actually use the service so as to gain some benefit from the unauthorized charges. However, when plaintiff attempted to use her LeisurePlus membership to receive a discount while travelling, in direct contradiction to what the plaintiff was originally told, defendant Stonebridge's customer service representative informed her that such benefits were not provided by her enrollment in LeisurePlus," Sims says.
Sims says she tried to cancel her membership four times with no success, and that Stonebridge still is charging her $6 to $9 a month.
She seeks restitution and class damages of more than $5 million and punitive damages for consumer fraud, deceptive trade, violation of the Automatic Contract Renewal Act, violations of the Electronic Funds Transfer Act, unjust enrichment, negligence, fraud by omission and breach of contract.
She is represented by Jay Edelson with Edelson McGuire.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.