HCI Direct Settles Consumer Protection Charges With 15 States

HCI Direct, a direct marketer of hosiery and other products, has reached a $455,000 agreement with Pennsylvania and 14 other states over charges it violated state consumer protection laws.

State Attorney General Tom Corbett said that HCI sent direct mail solicitations 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 allegedly received periodic shipments of merchandise, which they were charged for. Unless a consumer affirmatively opted out of the plan, they were continually charged and payment for one shipment automatically triggered another shipment, according to Corbett.

Corbett said that HCI allegedly failed to clearly disclose to consumers the negative option nature of the HCI’s plan, that enrollment in it 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, continued Corbett.

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 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, continued Corbett.

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.