HARRISBURG – A Bensalem company, which markets womens’ hosiery and other merchandise, has reached a $455,000 agreement with Pennsylvania and 14 other states over charges it violated state consumer protection laws.
Attorney General Tom Corbett identified the company as HCI Direct, Inc. of Bensalem. HCI Direct was formerly known as the Hosiery Corporation of America, a company which had a 1997 Assurance of Voluntary Compliance with 11 states.
Corbett said that HCI sent direct mail solicitation pieces to consumers and offered a free sample of merchandise, such as hosiery. After consumers responded to the solicitation, they automatically became enrolled in a continuity sales plan.
Investigators learned that under this plan consumers who were automatically enrolled received periodic shipments of merchandise, which they were charged. Unless a consumer affirmatively opted out of the plan they were continually charged and payment for one shipment automatically triggered another shipment.
“Despite the terms of the agreement 10 years ago, we have continued to receive consumer complaints about HCI’s business practices,” Corbett said. “Consumers were continually confused about receiving free hosiery and how they became enrolled in the continuity sales plan.”
Corbett said that HCI allegedly failed to clearly disclose to consumers the negative option nature of the Plan, that enrollment in the Plan was triggered by acceptance of the “free” merchandise, as well as the material terms of the plan such as the manner in which consumers could cancel enrollment.
As part of the agreement, HCI committed itself to include in the initial solicitation, as well as subsequent mailings, a clear and conspicuous disclosure of all material terms, conditions and obligations of the offer.
Corbett said that HCI also agreed to obtain an affirmative response from consumers before enrolling them in the plan and before providing any merchandise including free samples. The company must also include in its mailings a toll free number, a mailing address, as well as a website that consumers may contact in order to cancel.
As part of the agreement, HCI has also agreed to:
· Pay $455,000 to the states; Pennsylvania’s share is $63,000.
· Provide full and complete restitution to consumers who file complaints, claiming that they did not order merchandise or goods shipped by the company.
· Change its marketing practices.
· Stop using fictitious personal testimonials.
· Not using representations in its advertisements that contradict language in written contracts with consumers.
Any consumer who believes they are entitled to restitution in this case should file a complaint with the Attorney General’s Bureau of Consumer Protection by calling 1-800-441-2555 or online.
Complaints may also be filed with the Federal Trade Commission or the Better Business Bureau.
Pennsylvania led this multi-state agreement and was joined by Alaska, Delaware, Hawaii, Michigan, Montana, North Carolina, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Texas, Washington and Wyoming.
The Commonwealth’s case was handled by Senior Deputy Attorney General John Abel of the Attorney General’s Bureau of Consumer Protection.