MemberWorks Forms Consumer Advisory Panel

Membership club marketing company MemberWorks Inc. has formed a panel of advisers with experience in consumer issues to help the company build its reputation for integrity.

The six-member board will advise the company’s senior management and office of consumer affairs on marketing practices. It will meet three times a year, with senior executives including CEO Gary Johnson participating in at least two of the meetings, the company said.

Part of the reason MemberWorks formed the panel is the growing ire against the membership club marketing industry by government regulators and the public. Consumers have complained about unauthorized charges and difficulty in receiving refunds.

“There’s been criticism of the industry,” said Sandy Nelson, MemberWorks spokeswoman. “We’ve been trying hard to rise above that.”

MemberWorks has faced complaints about its own marketing practices. It has faced lawsuits over discount club memberships that were offered as upsells to products such as Billy Blank’s Tae Bo videos, a Richard Simmons product marketed by infomercial company GoodTimes Entertainment Inc. and the Abslide exercise machine from Sylmark.

MemberWorks, Stamford, CT, has entered into agreements with the attorneys general of California, Nebraska and New York in response to concerns about its marketing practices. The company also settled a 1999 lawsuit from Minnesota Attorney General Mike Hatch, who alleged that the company “used confidential information obtained from banks and other institutions to charge consumers for services and products that consumers did not believe they had ordered.”

But the company also has made moves to protect consumers. This year it instituted a “best marketing practices” policy that calls for full disclosure of membership, payment and refund terms, recording of telemarketing calls for verification purposes and a no-questions-asked full refund policy for unauthorized-charge complaints.

“We have been trying to be the industry leader,” Nelson said. “We want to set the standard.”

The board’s chairwoman will be Patricia Royer, former director of the New Jersey Division of Consumer Protection. She is vice president of consumer affairs for Merck-Medco Managed Care and serves on the board of directors of the National Consumers League and the New Jersey Consumers League.

Another prominent member is Frank Kelly, a former Michigan attorney general who was the first state attorney general to create a division of consumer protection within his office. Other members of the panel include:

* Mary Heslin, former commissioner of consumer protection for Connecticut.

* F. Nicholas Willard, director of state and federal affairs for WebMD Corp. and former state legislative counsel for AARP, a national association for older Americans.

* Dianna Goss, an independent legal consultant focusing on contracts and former chief in the consumer protection section of the Ohio attorney general’s office.

* Robert Marotta, attorney and former senior vice president/regulatory counsel for Merck-Medco Managed Care.

The panel includes several people from the healthcare field to represent the health services discount clubs offered by MemberWorks, Nelson said.

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