Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Customers said they were misled by the program’s terms.
A federal appeals court has upheld a lower court ruling dismissing a lawsuit that claimed customers of online printing services retailer Vistaprint were duped into enrolling in a paid membership rewards program.
The complaint alleged that parent company Vistaprint Ltd., No. 36 in Internet Retailer’s Top 500 Guide, Vistaprint USA Inc. and two other firms violated the Electronic Funds Transfer Act, the Electronic Communications Privacy Act and the Massachusetts Unfair Trade Practices Act. The U.S. Court of Appeals for the Fifth Circuit affirmed a lower court ruling that said terms of the program were clearly stated.
The case stemmed from Vistaprint’s relationship with Vertrue Inc. and Adaptive Marketing LLC, a Vertrue subsidiary. Vertrue and Adaptive Marketing offered customers a discount on their Vistaprint purchases as they completed the checkout process at Vistaprint.com.
Customers who accepted the discount were enrolled in a paid membership reward plan that allowed Vistaprint to share payment details with Vertrue and Adaptive Marketing, which subsequently charged membership fees to customers’ credit cards. The lawsuit, which lists four Vistaprint customers, alleged that the terms of accepting the Vistaprint discount were unclear and deceptive.
“We are very pleased that the Fifth Circuit Court of Appeals has affirmed the District Court’s dismissal order,” says Lawrence Gold, senior vice president and general counsel at Vistaprint. “We always maintained that the terms of the third-party membership programs were clearly stated and not deceptive.”
Vistaprint ended its relationship with Vertrue and Adaptive Marketing in late 2009, shortly after the U.S. Senate Committee on Commerce, Science and Transportation launched an inquiry into online membership clubs’ practices. Vistaprint said it ended the program on its own and not in response to the investigation.
In 2008, 6.2% of Vistaprint revenue came from membership programs, the company says.