A mail-order marketing firm paid $200,000 to settle federal charges of wrongdoing in an upsell offer of a 30-day trial membership in a buyers club service, the Federal Trade Commission said yesterday.
The payment is in addition to a separate $200,000 deal with the FTC to settle charges that the company, TechnoBrands Inc., engaged in deceptive advertising for six products it sold.
According to the FTC charges, the company's inbound teleservices agents offered a free trial membership in the buyers club to consumers who called in response to company advertisements for its retail products. TechnoBrands failed to give consumers clear warning that their credit cards would be billed if they did not cancel their membership before the end of the trial, the FTC said.
Furthermore, the company failed to alert consumers that their memberships would be renewed automatically and their credit cards billed on an annual basis, according to the FTC. Telephone agents for TechnoBrands told consumers that they would incur no obligation by accepting the trial offer and that no charges would be made without the consumer's authorization, the FTC said.
In the separate case, the FTC said the company made unsubstantiated claims in catalogs, online and in newspaper and magazine ads for several of its products. The products included a dietary supplement for weight loss, a magnetic analgesic device, a hair-growth stimulator and an air filter.
The company must provide scientific evidence to uphold the claims made in its ads, the FTC said. Settlement money from both cases will be used to repay consumers who bought products and services from TechnoBrands, the FTC said.
TechnoBrands, Colonial Heights, VA, was formerly known as Comtrad Industries.
