February 20, 2002
Triad Discount Buying Service

FOR IMMEDIATE RELEASE

BUYING CLUBS TO PAY $9 MILLION TO SETTLE DECEPTION CHARGES

    COLUMBIA -- A group of buying clubs will pay more than $9 million to settle charges that they deceived consumers into purchasing club memberships, Consumer Advocate Phil Porter announced today.

Florida-based Triad Discount Buying Service Inc., its related companies and their operator, Ira Smolev, agreed to pay $8.3 million for consumer restitution and $750,000 to cover investigative costs. Florida and Missouri led the multi-state investigation, and a total of 29 states, including South Carolina, are participating in the settlement through separate agreements, which are similar to an agreement reached last year between Triad and the Federal Trade Commission.

In the agreement entered in South Carolina, the Department of Consumer Affairs alleged that the Triad companies deceptively signed up buying club members through third-party marketers. Triad contracted with those companies to promote club memberships when consumers responded to the contracted companies' advertisements for their own products.

"An individual calling in response to a television commercial for a particular product would be told that in addition to their purchase, they could receive a free, 30-day membership in a buying club and enjoy big savings on other items," Porter said.

"Once consumers agreed to have the membership materials sent to them, and even in many instances when they did not agree, their names and credit card numbers were provided by the third-party companies to the Triad companies. Within 45 days, the Triad companies charged membership fees to the consumers' credit cards without their knowledge or authorization," Porter said.

Approximately 275,000 consumers who filed complaints against Triad companies nationwide may be eligible for refunds from the companies pending court approval. In South Carolina, it is estimated that the Triad companies may have adversely affected 4,122 consumers.

In addition, the Triad companies and Smolev, who are currently in bankruptcy court, are required to drastically revise their marketing practices to avoid future deceptions. Included in those changes are prohibitions against misrepresenting "free" offers of goods or services and failing to disclose any obligations of consumers in accepting trial offers. The companies are also prohibited from signing up new members or renewing existing memberships without express, verifiable authorization from the consumer, and from obtaining or disseminating consumers' personal billing information, including credit and unique identifying information, without authorization.

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