Affinion Group

Affinion Group is an affinity marketing company in Stamford, Connecticut, and is currently composed of subsidiaries known as Trilegiant Corporation (TLG), Progeny Marketing Innovations, Affinion International, Affinion Loyalty Group, Affinion Security Center. The company conducted business before 2005 under the names Benefit Consultants Inc., Cendant, CUC International, and Comp-U-Card. Affinion was formed in July 2005 and is a privately held company controlled by private equity concern, Apollo Management LP. The business's assets were acquired from the Cendant Corporation (which changed its name to Avis Budget Group in August 2006).

Overview

Affinion Group is an affinity marketer of membership, insurance, package enhancement, and loyalty programs. Direct marketing is defined by the Direct Marketing Association ("DMA") as any direct communication to a consumer or business that is designed to generate a response in the form of an order for goods or services. Affinity marketing is a subset of the larger direct marketing industry which involves marketing to the customers of institutions, such as financial service providers and retailers, using the brand name, customer contacts and billing vehicles of those institutions. Affinity partners benefit as they are able to promote their brands while offering additional programs and services thus strengthening their relationships with their customers and also generating incremental revenue.

Affinion Groups's business model generates an alternate incremental revenue source for its affinity partners which include many of the world's largest financial institutions, major consumer-driven corporations and Fortune 500 companies. These partners benefit from Affinion's direct mail, telemarketing, database modeling, customer acquisition strategies and on-line marketing services. Affinion's revenues are generated primarily through the sale of subscription-based products and services to the customers of their affinity partners and in some cases from partner managed programs when the institution elects to market Affinion's products and service directly to their own customer base.

In addition to legacy product lines, Affinion Group also provides identity theft services and data breach solutions offered as a part of an affinity partner program or marketed directly through the Affinion Security Center division establishing in 2008.^[1]

Affinion was founded in 1973 (known then as Comp-U-Card) and has about 5,200 affinity partners. The company's headquarters are at 6 High Ridge Park in Stamford, Connecticut (it had moved there in early 2010 from Norwalk, Connecticut^[2]) and employs about 3,000 people in the United States and in fourteen European countries and South Africa.^[3] Affinion Group has proprietary rights to a number of trademarks which are important to its business, including: Affinion Group; Affinion Benefits Group; Affinion International; Affinion Loyalty Group; AutoVantage; Buyers Advantage; CompleteHome; Enhanced Checking; HealthSaver; Hot-Line; NHPA; PCSafetyPlus; PrivacyGuard; CardCops; IDSecure; Identity Secure; Affinion Security Center; BreachShield; Shoppers Advantage; Small Business Solutions; Just For Me, Great Fun!; Travelers Advantage; Great Options; Trilegiant Corporation and Wellness Extras.^[4]

Affinity/Membership Business

Affinion Group develops customized marketing programs for affinity partners, these programs include a variety of products and services delivered directly to the partner's end customers designed to strengthen their customer relationships as well as generate significant incremental revenues. Affinion deploys various types of media, such as direct mail and internet campaigns, bundling the benefits of product offerings on a highly targeted basis. As of June 30, 2007, Affinion Group had more than 5,200 affinity partners in a variety of industries including insurance, financial services, retail, travel, telecommunications, utilities and on-line service providers. Some leading affinity partners include JPMorgan Chase, Bank of America, Royal Bank of Scotland, Société Générale, Sears, PNC, Macy's, CompUSA, and Staples.

Depending on the nature of the relationship Affinion has with a given affinity partner, customers either purchase its programs and services directly from Affinion or services are provided through an affinity partner branded program. As of June 30, 2007, Affinion had about 70 million customers enrolled in its programs worldwide.^[5] In addition to its own development, Affinion also contracts with third-party vendors to provide components for some of its products and services.^[5] Generally relationships with key vendors are governed by long-term contracts. By combining the services of vendors along with in-house capabilities Affinion is able to offer 30 core products and services with over 300 benefits and support more than 5,000 versions of products and services representing different combinations of pricing, benefits configurations and branding.

Identity Theft and Data Breach Protection Businesses

Affinion Group offers a suite of credit monitoring, identity theft protection and data breach solutions through its Affinion Security Center established in 2008 supported by its 2007 acquisition of CardCops, a technology based company using cutting edge tools to monitor public records and foreign 'underground' chat rooms where full sets of personal information are bought and sold by identity thieves.^[1] When information such as credit card account numbers, debit card account numbers, PIN numbers, Social Security Numbers, mother's maiden name or other types of compromised personal information is detected by analysts, customers are alerted so they can take proactive measures to protect themselves from possible identity theft and fraud. Affinion has been instrumental in the discovery of large scale data breach activity and is often cited as an expert opinion in such cases.^[6][7][8]

History

Prior to 2005, Affinion Group was known solely as Trilegiant Corporation (TLG) and Progeny Marketing Innovations,(prior to that was doing business as Benefit Consultants Inc., Cendant, CUC International, and Comp-U-Card), a membership-based discount provider of travel, shopping, health, dental, entertainment, buying clubs, and consumer protection services. TLG/Affinion is the successor to Cendant Membership Services, Inc. and Cendant Incentives.

Comp-U-Card began offering membership products in 1973 through the formation of Comp-U-Card of America, Inc. (CUC). Between 1985 and 1986, CUC acquired the insurance and package enhancement products of Financial Institution Services, Inc. and Madison Financial Corporation. In 1988, CUC acquired National Card Control, Inc., which was formed in 1981 and provided loyalty solutions and package enhancement programs. The international products were started by CUC in the early 1990s. In 1997, CUC merged with HFS Incorporated to form Cendant Corporation. The international products were rebranded as Cendant International Membership Services after the formation of Cendant. In 2001, the U.S. membership products were rebranded as Trilegiant and the loyalty solutions products were rebranded as Trilegiant Loyalty Solutions. The insurance and U.S. package enhancement products were rebranded as Progeny in 2002.

During these periods, the various products within the combined financial statements operated independently and were subject to certain non-compete agreements between them which limited their access to new products and markets. In 2004, Trilegiant Corporation terminated the non-compete agreements described above and streamlined its organizational structure to integrate these historically separately managed products lines. Accordingly, the company's North American membership, insurance, package and loyalty products came under common management beginning in the first quarter of 2004 and the North American management team assumed responsibility for international products in late 2004 and oversight of the travel agency in the first quarter of 2005.^[9]

In 2005, Cendant and Trilegiant entered into a purchase agreement to which Affinion (backed by private equity) purchased from Cendant all of the equity interests of what is now known as Affinion Group, LLC (known as Cendant Marketing Services Group, LLC prior to the 2005 transactions) and all of the share capital of Affinion International Holdings Limited ( previously known as Cendant International Holdings Limited).^[10]

In the second quarter of 2007, the company acquired the data/identity theft detection service CardCops to support existing identity theft and credit monitoring product offerings and in 2008 established the Affinion Security Center serving both consumers and businesses with products, solutions and consultative services for identity theft and data breach events.^[1]

Complaints

According to the Better Business Bureau, thousands of issues have been reported by consumers for deceptive selling practices, unauthorized charges to consumers' credit cards, and failure to respond or resolve issues. Consumers are told that it takes 28 days for a charge to be canceled or credited back, and even employees of the credit card company are not able to dispute these charges in the same manner any other charge would be handled. Per the creditors contracts with Affinion Group disputed charges were to be processed by contacting Affinion directly. Where any normal unauthorized charge can be disputed and resolved within a month as a matter of law, charges from these merchants are often not resolved for several months on end.^[11]

On March 7, 2005, the company made a Settlement Agreement with the Office of the Attorney General of Florida. Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Florida Statutes.^[12]

In July, 2005, the Attorney's General of Connecticut, California, and Maine brought a lawsuit against TLG/Affinion for allegedly deceiving consumers into enrolling in its clubs.^{[13] [14]}

In December, 2006, Trilegiant/Affinion agreed to pay over $8 million to 17 states and their residents to settle allegations of deceptive selling practices.^[15]

In August 2010, Affinon/Trilegiant settled a consumer fraud action brought by the Attorney General of the state of New York for $8 million USD.^[16]

In March 2012. a class action lawsuit was announced by Gilman Law LLP, a national law firm specializing in consumer protection. According to Gilman Law LLP, Trilegiant has been accused of colluding with numerous online merchants in an effort to sell memberships in the above named discount clubs. According to the complaints, consumers were induced into "joining" these clubs when they made purchases at websites. The complaint alleges that Trilegiant paid these reputable online retailers for customers' billing information, including credit card and debit card numbers, through a process known as "data pass." ^[17]

References

External links

• Official Affinon.com Website
• Official Affinion Security Center Website
• Affinion ranked #321 on Forbes Top Private Company List
• California Attorney General's announcement of 2006 settlement with Trilegiant/Affinion, and Text of Settlement Judgement
• State of California Trilegiant Fraud Restitution Form