The parties have reached a $535,000 settlement in an FTC administrative proceeding filed against Special Data Processing Corporation (SDP) of Clearwater, Florida, on behalf of all persons who purchased subscriptions to the Triad Discount Buying Service. The action alleged that SDP violated FTC regulations by failing to disclose adequately that consumers had to cancel Triad within 30 days to avoid having their credit cards charged an annual fee, and that their cards would be charged a renewal fee each subsequent year unless they canceled the membership. Persons eligible to take part in the settlement should contact the attorneys who prosecuted the case for more information.

According to the Commission, during 1998 and 1999, SDP pitched the Triad service to consumers, typically through up-selling to their own customers or to customers transferred to them by third-party sellers, by using telemarketing scripts that were based on ones they received from Triad. The lawsuit alleged, that by up-selling the Triad buying service to consumers, SDP violated the FTC Act and the Telemarketing Sales Rule. Specifically, the complaint charges that SDP: (1) misrepresented that consumers who agreed to the 30-day membership trial offer would incur no obligation to take any action to avoid having their credit cards charged for the membership; (2) failed to disclose that consumers who failed to cancel within 30 days would have their credit cards charged an annual fee and that renewal fees would be charged automatically in each subsequent year; and (3) unfairly caused charges to be submitted for payment for buying club services without consumers’ express informed consent. The complaint also alleges that, in outbound telemarketing calls, SDP failed to disclose promptly in a clear and conspicuous manner the identity of the seller and that the purpose of the call was to sell magazines, in violation of the TSR.

Under the terms of the settlement, SDP will pay $535,000 for consumer redress. The funds may be combined with the $137,500 redress fund in the FTC’s action against Triad, FTC v. Ira Smolev. The order also addresses SDP’s telemarketing of membership services with a negative option feature and the use of up-selling. It prohibits SDP from violating telemarketing regulations and from falsely representing the amount, timing, or manner of any charge or bill; that a consumer will not be charged or billed without his authorization; or that a consumer bought a good or service or authorized a transaction. Other order provisions require SDP, in connection with telemarketing, to make certain disclosures related to billing, shipment, and other material conditions of any offer. The order also contains terms to ensure SDP gets customers’ express informed consent before billing them for any good or service.

Persons eligible to take part in the settlement may contact the FTC attorneys who prosecuted the case for more information.