UPDATE 1-Cuomo says 6 settle on hidden online shopping fees

Wed Aug 18, 2010 2:24pm EDT

* The marketer Affinion accepts $8 mln settlement

* Avon, Budget, Classmates, FTD, GameStop also pay

* Cuomo says shoppers tricked into paying fees

* Probe continues following 22 subpoenas (Adds updated statements by Affinion, Webloyalty)

By Jonathan Stempel

NEW YORK, Aug 18 (Reuters) - New York Attorney General Andrew Cuomo said six companies will pay $10.1 million of fines and restitution after hundreds of thousands of consumers were tricked into joining discount clubs that carried hidden fees.

Cuomo said on Wednesday that marketing company Affinion Group Inc and its Trilegiant unit will pay $8 million, including $5 million for a fund to reimburse defrauded customers and $3 million of fines and fees.

Five retailers will also pay $2.1 million toward refunds and consumer education: Classmates Online Inc, FTD Inc, Avis Budget Group Inc CAR.N, GameStop Corp (GME.N) and Avon Products Inc (AVP.N), the attorney general said.

Cuomo, a Democrat, is the front runner in November's election to become New York's next governor.

Cuomo had in January announced a probe into the discount club industry and issued subpoenas to 22 retailers that worked with three marketers offering discount programs: Affinion/Trilegiant, Vertrue Inc and Webloyalty.

He said shoppers who bought goods online would often get cash-back and discount offers from marketers and accept them without realizing they were agreeing to join fee-based programs and hand over credit and debit card information, because these obligations were buried in the fine print.

"Consumers should be on the lookout for cash-back and other discount offers that suddenly appear online or in the form of a check," Cuomo said in a statement. "They are often too good to be true."

Mike Bush, an Affinion spokesman, said the Stamford, Connecticut-based company was pleased to settle, and has ended all practices that Cuomo criticized. Affinion is owned by private equity firm Apollo Management LP [APOLO.UL].

Cuomo spokesman Richard Bamberger said the probe is continuing.

A Webloyalty spokesman declined to comment on the probe, but said the company's enrollment process now occurs only when customers enter their credit or debit card numbers. A Vertrue spokeswoman did not immediately return a call seeking comment. (Reporting by Jonathan Stempel in New York; editing by Andre Grenon and Gerald E. McCormick)

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