People-search company Intelius Inc. agreed Tuesday to pay $1.3 million to settle state allegations that thousands of customers were charged for services they inadvertently signed up for.
State Attorney General Rob McKenna said many of the customers thought they were paying less than $5 to look up contact information through Intelius websites such as http://www.peoplelookup.com, but wound up being charged about $20 per month for credit-monitoring or other services.
At issue were offers that customers were made after they agreed to pay the initial people-search fee, but before they saw the results of the search.
They had a choice of clicking on a large, red box that said "Yes, and show me my report" or a smaller gray one that said, "No thanks, show my report." Despite a disclaimer on the web page that described the "yes" option meant their credit cards would be charged monthly fees, hundreds of thousands of people around the country did so.
In some cases people were charged by the Washington-based Intelius, and in other cases they were charged by a third-party vendor -- Adaptive Marketing, a subsidiary of Connecticut-based Vertrue Inc. Adaptive paid Intelius up to $59 for every customer who signed up for one of Adaptive's programs -- a bounty that totaled $35 million from 2007-2008.
The programs included credit monitoring and roadside assistance.
Thousands complained to the Better Business Bureau, the company or offices of attorneys general around the country, but many had trouble recouping their losses, McKenna said.
"When thousands and thousands of people complain they didn't know they were signing up ... it's unfair and deceptive to a reasonable person," he said.
The settlement includes $300,000 in legal fees and $1 million to reimburse some of the approximately 20,000 customers in Washington who signed up for Intelius or Adaptive programs.
McKenna said attorneys general in other states may be going after Intelius to get money back for customers in those states, and other customers are seeking refunds through class-action lawsuits.
Intelius did not admit wrongdoing in the settlement agreement filed in King County Superior Court on Tuesday. The agreement restricts it from engaging in similar marketing activities in the future.
"Intelius will comply with the consent decree while remaining focused on providing great products and services to our 10 million customers," said company spokesman Jim Cullinan.
The company agreed to contact Washington customers who may be eligible to receive a share of the settlement.