In a civil lawsuit filed in Washington District Court, Attorney General Bob Ferguson has accused the language-software seller Pimsleur of unfair trade practices. The suit, filed on behalf of affected Washington consumers, accuses the company of using “negative option” billing practices to trick customers into providing their credit card details, while not adequately warning them that their cards will be billed in the future, sometimes again and again.
According to the Attorney General’s complaint, consumers who purchased the introductory software program for $9.95 were unknowingly and automatically enrolled in a “negative option” purchase plan, which obligated them to receive up to four additional courses at a cost of over $1,000 in total. If true, such deceptive trade practices would run afoul of the Restore Online Shopper Confidence Act, as well as Section 5 of the FTC Act, and several state consumer protection laws.
While negative option billing practices are not illegal per se (most magazine subscriptions, gym memberships, and movie rental outfits use some version of the practice), the legal complaint accuses the company of deceptive behavior in not properly revealing these terms to the consumers, nor gaining their affirmative assent to enroll them in the program. Additionally, the company is accused of making it very difficult for consumers, at their own expense, to return the products for a refund or cancellation. The Washington lawsuit marks an increase in state attorney generals going after online marketers for deceptive advertising practices.
“The company hid the terms of the negative option program in its advertising, and misled consumers into thinking they’d only ordered the inexpensive introductory course for $9.95,” said Ferguson. “Consumers were shocked to find significant charges appearing on their credit card statements for products they hadn’t ordered, and then angered when the company refused to cancel those charges.”
The Pimsleur product line is marketing through radio, TV, affiliates, and search engine advertising throughout the U.S. it is believe that over 38,000 customers in Washington alone are affected.