A Philadelphia-based online education company with an audio-based language-learning program that uses the “Pimsleur” method is being sued by the Bureau of Consumer Protection, according to Pennsylvania Attorney General Kathleen G. Kane.
The Philadelphia Inquirer reports that the lawsuit accuses the company of harming and deceiving consumers. One example of the deception was that Stoll (aka Pimsleur) was offering its customers a CD at a discounted price of $9.95, but failing to “clearly and conspicuously” tell consumers that they would be automatically enrolled in a program and would receive CDs priced at $256 per set until the consumer cancelled his or her membership. The company’s CEO Daniel Roitman said the company:
“…has always complied with the letter and spirit of the law, we have been truthful in our marketing, we treat each of our customers with respect and we respond to each and every customer inquiry quickly and accurately.”
Legal Newsline reports that under Pennsylvania Unfair Trade Practices and Consumer Protection Law, the state will seek “restitution, civil penalties, and a permanent injunction against the company to prevent future violations”.
The lawsuit goes further by alleging that the company forced customers to go through a complex process to cancel the program. Consumers were expected to pay for return shipping of the CDs before their membership was cancelled, says Paul Smith of WPMT-TV. A company press release states the company revenue grew 424% from 2009 to 2012, making $16.2 million in 2009 and $84.9 million in 2012.
On Ripoff Report, an online site where consumers can warn other consumers about businesses that are scamming, cheating, or deceiving customers, there are 60 reports slamming the Stroll Company.
On the Pimsleur Approach home page, there is no explanation of the addition of $256 sets which will be sent after the $9.95 4-CD set is sent. An interesting quote on the Contact page of the Stroll site says:
“We are not an agency. We aren’t a traditional e-commerce company. We don’t build or create the products we sell. Rather, we are a revenue accelerator—a finely tuned marketing machine that can supercharge the sales growth of products through the scientific application of analytics and the art of marketing.”
Washington State Attorney General Bob Ferguson last week filed a lawsuit against Stroll for its deceptive tactics used to draw in millions of customers, including 38,000 people in Washington. Ferguson is suing the company for violating the federal Restore Online Shoppers’ Confidence Protection Act (ROSCA) and the state’s Consumer Protection Act because of a negative option program. Washington is the first state to bring a legal action under ROSCA, according to Taylor Soper of GeekWire.
“The company hid the terms of the negative option program in its advertising, and misled consumers into thinking they’d only ordered the inexpensive introductory course for $9.95,” Ferguson said in a statement. “Consumers were shocked to find significant charges appearing on their credit card statements for products they hadn’t ordered, and then angered when the company refused to cancel those charges.”
Roitment made a statement in which he said that his company had always sought to comply with the the law. He added that he was proud of the work his company does and he is looking forward to putting this matter behind him.