Membership Has Its Disadvantages

Outgoing Atty. Gen. Bill Lockyer has settled a lawsuit against Chase Bank and a "membership company" that misled consumers with supposedly free programs like Pet Privileges, Shoppers Advantage and Auto Vantage. The membership firm - with the Simpsonesque name of Trilegiant Corp. - failed to tell people they would be charged automatically if they did not cancel their memberships.

Chase, with revenues of about $80 billion a year, will pay $14.5 million to settle the lawsuit.

The settlement is a study in how the government can thoroughly take over a business when they behave like a naughty child. Trilegiant is ordered to use specific language when soliciting customers and must be made "in the first paragraph of the main body, in the first page of the main body in type that is bold in comparison to the majority of other text on the page." They also are prohibited from using the words "free," "complimentary" or "risk-free" in specific parts of the solicitation.

The settlement agreement also imposes $404,015 in civil penalties and $518,523 to reimburse the taxpayers for attorneys fees and investigative costs at Lockyer's office. Read the trial settlement judgments here and here.