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Post date: September 1 2015

A.G. Schneiderman Announces $1 Million Settlement With Online Marketer That Deceptively Enrolled Consumers Into High Cost Pimsleur Language Courses

Settlement Requires Internet Order LLC to Reform its ‘Negative Option’ Marketing Practices And Receive Express Informed Consent Before Charging Credit Cards  

NEW YORK – Attorney General Eric T. Schneiderman today announced that New York has entered into a $1 million multi-state settlement with Internet Order LLC, doing business as Pimsleurapproach.com, over its use of ‘negative option’ marketing in the sale of Pimsleur-branded language audio courses over the Internet. The agreement resolves an investigation concerning the company’s, and owner Dan Roitman’s, failure to clearly disclose that the purchase of a language course advertised as “only $9.95” included the shipment of additional language courses that, if not returned, could cost the consumer more than $1000. 

“Consumers deserve to be treated fairly and not subjected to deceptive marketing practices that unexpectedly cost hundreds of dollars or more,” said Attorney General Schneiderman. “Today’s settlement requires Internet Order LLC to obtain express informed consent before billing consumers for products and makes it clear that my office will not tolerate any abuses of consumers’ trust.”

Retired New York State Justice Stephen G. Crane, who filed a complaint with the Attorney General’s Office after spotting what he believed was a bogus charge from Internet Order LLC on his credit card bill, said, “I consider myself a careful lawyer. I was scammed by fine print buried in a bold-type offer for wanting to learn a foreign language. I thought the program was a great introduction to Italian for $9.95. Imagine my amazement when I was billed for an additional $256, and then started to receive threatening letters from Internet Order demanding payment.”

Internet Order LLC is an online marketing company that sells Pimsleur-branded foreign language-learning audio courses licensed by Simon and Schuster, primarily through its Internet website www.pimsleurapproach.com. It advertises the audio courses for “only $9.95.” However, upon signing up for this offer, the consumer was unwittingly enrolled in a “negative option plan,” obligating the consumer to receive up to four additional audio courses at a cost of $256 per course. Thus, while the consumer thought the total obligation was “only $9.95,” his or her obligation was as high as $1024, which is 10,291% more than the conspicuously advertised price of $9.95. 

Consumers who called Internet Order to return the unwanted courses were subjected to “save” techniques by the company to avoid the cancellation. Additionally, defendants would not refund the consumer’s money unless the course was returned within a 30-day “free trial” window. Consumers were also requested to pay return shipping, despite the promise of the offer being “Risk Free” and “100% Money Back Guarantee.”  Defendants also sent threatening collection letters to customers who refused to pay. They placed a partial social security number on their collection letters, and threatened to send delinquent accounts to a collection agency, even though they did not have the customer’s social security number and never sent the account to a collection agency. 

Under the terms of the settlement, before enrolling a consumer in a negative option plan, Internet Order must receive the consumer’s “express consent” to the arrangement, which does not include a pre-checked box. It must give clear, easy-to-read notice at many stages of the transaction: on any advertisement for the plan, on the webpage that lists a billing summary of an online transaction, and in a confirmatory email sent to the consumer.  Additionally, all future shipments of goods must include a clear invoice that provides details about what the consumer must pay if the consumer does not return them.  Internet Order must also create and publicize procedures to cancel future shipments or return a particular shipment.  During any “free trial period,” Internet Order must reaccept the items with no extra fee; and there are limitations on what Internet Order can charge consumers who return the items after the free trial period.  Finally, Internet Order must train its employees to comply with the order, and discipline those who do not comply.

The settlement also requires Internet Order to pay $1,002,000 in restitution to victims of the scheme through a claims process.  The Claims Administrator will be sending an email to consumers who purchased the CDs from Internet Order between January 1, 2009 and April 1, 2013, and who unsuccessfully attempted to cancel within 45 days of the expiration of the “free trial” period.  The email will provide a link to a claim form with directions on how to seek a refund.  

New York consumers that have questions about the agreement can call the Attorney General’s Consumer Helpline at (800) 771-7755 and follow the prompts for the Internet Bureau. Consumers who believe they were harmed by this business’s negative option marketing scheme can file a written complaint with the NYAG at www.ag.ny.gov.

Internet Order LLC and its website Pimsleurapproach.com are not affiliated with Simon and Schuster, the publisher of Pimsleur-language learning programs.

This settlement was made in conjunction with the Attorneys General of Pennsylvania and Washington. 

This case was handled by Deputy Bureau Chief Clark Russell and Assistant Attorney General Jordan Adler of the Internet Bureau, Internet Bureau Chief Kathleen McGee, and Executive Deputy Attorney General for Economic Justice Karla Sanchez.