Negative-Option Marketer Settles With FTC

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A company accused of defrauding consumers via a supposed "free trial" offer agreed to cease all business activities as part of its settlement of a Federal Trade Commission complaint, the FTC said yesterday.

Preferred Alliance Inc., which did business as VacantSun Travel Discounts and GenesisCard, pitched trial offers to consumers nationwide but failed to tell them the offer was a negative-option program in which they had to opt out by the end of the free period or pay a $99.95 annual fee, the FTC said.

Preferred Alliance did business through a third-party marketer, which provided it with consumer billing information without consent, and refused to provide timely refunds, according to the FTC.

The third-party marketer would offer Preferred's discount travel and healthcare programs as an upsell during inbound and outbound calls for diet and vitamin products, according to the FTC. Preferred Alliance then sent consumers misleading direct mail, including a "courtesy notice of automatic billing," that many consumers discarded, the FTC said.

Preferred is bankrupt and in the control of a Chapter 7 trustee. The settlement with the FTC, enacted in U.S. District Court in Atlanta, forbids the trustee from seeking to operate the company or sharing its customer list, the FTC said.

Bruno Faillace, the company's principal, faces trial on separate civil charges.


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