South Dakota Reaches an Agreement with Direct Marking Company to Change Business Practices  

PIERRE, S.D.-  Attorney General Larry Long announced today that South Dakota and 14 other states have reached an agreement with a Pennsylvania direct marketer of womens’ hoisery and other merchandise, requiring the company to change its marketing practices and pay the states a total of $455,000.00 to settle charges it violated state law. The state share is $29,000.

HCI Direct, Inc. (HCI) sent direct mail solicitation pieces offering a free sample of merchandise, such as hoisery. After consumers responded to this solicitation, consumers then became enrolled in a continuity sales plan. Under this plan, if a consumer did not cancel, payment by the consumer for one shipment automatically triggered another shipment. As a result of their investigation, the Attorneys Generals alleged that HCI's conduct in running its continuity sales plan violated consumer statutes in failing to clearly and conspicuously disclose all of the material terms and conditions.

Under the terms of the agreement, the company committed itself to include in the intitial solictation, as well as subsequent mailings, a clear and conspicuous dislcosure of all material terms, conditions and obligations of the offer.  Moreover, the company 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.

HCI also agreed to pay a total of $455,000.00 to the states for public protection and education purposes.  The company also agreed to provide full and complete restitution to consumers who file complaints, claiming that they did not order merchandise or goods shipped by the company.

If you have any additional questions regarding this settlement contact the Consumer Protection Division at 1-800-300-1986.

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