Intelius Dodges a Bullet Over Allegedly Deceptive Online Marketing Practices — Hook v. Intelius

[Post by Venkat Balasubramani]

Hook v. Intelius, 10-CV-239(MTT) (M.D. Ga.; Mar. 28, 1011)

I mentioned a class action in Washington against Intelius over its online sales practices in a couple of weeks ago. (“Intelius May be Liable for Deceptive Online Marketing Practices Based on Third Party Transaction at Checkout.”) Although the Washington court denied Intelius’s motion to dismiss and allowed the claims to go forward, a judge in Georgia came to a different conclusion and dismissed a similar complaint against Intelius.

Motion to Strike the Screenshots: Intelius took an interesting approach in its motion to dismiss. It attached archived versions of the screenshots which reflected the webpages which the plaintiff ostensibly viewed when he made the purchase at Intelius. Intelius also convinced the court to allow limited discovery on the authenticity of the screenshots, and if found to be authentic, rule on the motion to dismiss while considering the screenshots. The court finds that there is no evidence to indicate that the screenshots were not authentic representations of

the webpages that resulted from running [plaintiff's] email search request on the regenerated archived code from [the date in question].

Plaintiff argued that Intelius’s evidence could be self-serving and that Intelius representatives could have concocted a scheme to conduct a fraud on the court, but the court finds that there’s no evidence to back this up (and that if such a scheme existed and was discovered, it would “subject the Defendants and their attorneys to the harshest possible sanctions”). [Convincing the judge to allow limited discovery into the webpages in question was a creative approach by Intelius to avoid lengthy drawn out discovery that would otherwise accompany a lawsuit.]

The Transaction Process: The court describes the flow of the transaction in “laborious” detail. In the first step, the customer conducts a search for an email address (at one of Intelius’s partner sites). In the second step, the customer “lands” on the Intelius site. The results page are displayed on the third step. On the fourth page, the customer is presented with pricing information for the first time. “Identity Protect,” the product that plaintiff claims he unwittingly signed up for is also mentioned. Here, the customer can choose between the standard pricing ($4.95) and a “special price” of $1.95:

[t]he unmistakable impression one gets from viewing this page is that there are two purchase options: one, at the “Regular Price” of $4.95, and another at the “Special Price!” of $1.95, which is 60% off and comes with a “FREE Identity Protect Trial.” However, it is not clear at this point that the 60% discount is conditioned on the customer selecting the free Identity Protect trial.

The fifth page contains an explanation of Identity Protect, as well as the fact that the customer is charged $19.95 if the customer does not cancel after the 7-day trial. As the court notes:

At this point, the ambiguity of the previous page with respect to the Identity Protect trial’s relationship to the discount is resolved, one can only receive the $3.00 discount by signing up for a free, seven-day trial of Identity Protect.

After the fifth page, there are five additional pages – the customer actually receives the requested information at the tenth page. The confirmation page does not provide any information about how to terminate the Identity Protect membership.

EFTA Claim: Plaintiff claimed that Intelius engaged in an “unauthorized fund transfer.” The court says no, the transfers were “clearly . . . preauthorized.”

ECPA Claim: Plaintiff also claimed that Intelius unlawfully intercepted an electronic communication. The court rejects this claim as well, finding that Intelius was a party to the communication (i.e., was intended to receive plaintiff’s credit card information) and “used the information for the purpose it was given.”

Unjust Enrichment: The court also rejects plaintiff’s unjust enrichment claim, finding that Intelius performed according to the terms of its agreement with plaintiff, and plaintiff took six months to cancel the trial membership. Unjust enrichment applies where there is no contract and here there was a contract which both sides performed.

Georgia Unfair Trade Practices Claim: Plaintiff had a few theories as to how Intelius violated Georgia’s unfair trade practices statute, but the court shoots them all down. With respect to the core claim that Intelius failed to disclose material facts about the membership program, the court states:

Intelius disclosed the details of the Identity Protect program at least five times before the Plaintiff made his purchase. One wonders, if these five disclosures were not sufficient to make the Plaintiff aware of the nature of the transaction, what would have been?

___

The tenor of this court’s decision is different from the Washington court’s. There, Judge Lasnik noted that

[t]he capacity of a marketing technique to deceive is determined with referenced to the least sophisticated consumers among us.

The court here did not delve into the standard but one does not get the sense that the court evaluated the transaction from the perspective of the “least sophisticated internet consumer.”

On the other hand, the transactions in question were slightly different. I’ve uploaded the pages from the court’s order which contain the screenshots in question (which are worth a look and which you can access here), and there is a fair amount of disclosure that if you don’t cancel the Identity Protect trial within seven days, you will be billed $19.95 monthly. However, you do get the sense that customers are put through a transaction labyrinth to make it hard for the customers to jump between the two tracks. Once the customer goes down the free trial path, the customer is not given much of an opportunity to simply remove the free Identity Protect trial and continue with the transaction. Unlike the Georgia court, the Washington court focused on the process and whether it would be deceptive to the consumer.

One thing is for sure, Intelius is definitely not taking the “one click” approach to online transactions!

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Intelius May be Liable for Deceptive Online Marketing Practices Based on Third Party Transaction at Checkout