Complaint Review: MWI - Simple Escapes 2 - Stamford Georgia

This first part is from Memberworks on site on what they do. Officers [Insider Trade Data] FY2002 Compensation Pay Exer Gary Johnson, 47 Pres, CEO $1.5M -- James Duffy, 48 CFO, Exec. VP 714K -- Vincent DiBenedetto, 45 Exec. VP of Sales and Client Services 484K -- William Olson, III, 44 Exec. VP of Sales and Client Services 457K -- David Schachne, 41 Exec. VP, Bus. Devel. 540K $407K Corporate Profile MemberWorks is one of the largest third-party marketing services companies in the U.S. With over $428 million in annual revenue and 6.3 million active consumer members, we are the membership services leader, setting the standard for value, innovation and consumer privacy. We bring value to consumers by designing innovative membership programs that offer services and discounts on everyday needs in healthcare, personal finance, travel, entertainment, and fashion among others. By joining on an annual or monthly basis, our members gain convenient access to thousands of service providers and vendors. Over time, our strong base of renewing members provides MemberWorks with an attractive recurring revenue stream. In the six years since going public, revenues have grown over 40% on a compound annual basis and the company has generated over $125 million in operating cash flow. As such the Company has achieved its growth through internally generated cash flow and with virtually no debt. Now with our market leadership and critical mass established, we are focusing on profitability generation and contuing our efforts to accelerate cash flow. Our strategy is to continue to enhance consumer value while identifying opportunities for margin improvement. Our programs offer members the ability to save thousands of dollars on everyday products and services across a diverse range of lifestyle interests, including shopping, travel, entertainment, home, health and fitness, and privacy and protection. Our members enjoy convenient access to significant savings at big-name, national retailers as well as at neighborhood service providers. In addition to our membership programs, we offer low-cost insurance products accidental death, term life, hospital and catastrophic disability that help provide peace of mind for a variety of lifestyle needs. Consumers join our programs to save money, and they represent significant purchasing power. To that end, we have forged strong relationships with over 400 of the nation's top retailers and service providers, who benefit from increased traffic and enhanced brand exposure to our 13 million retail and wholesale members. By offering our programs through large, consumer-driven organizations, we are able to help our client and marketing partners generate additional revenue, strengthen customer loyalty and affinity, and enhance their market presence. We constantly seek new ways, or channels, to make our programs more readily available to a wider audience of consumers. Traditional channels, including telemarketing and direct mail marketed through our client partners, are already well-established. Additionally, we are developing more innovative methods to attract consumers. For example, our in-bound marketing channel, MemberLink, is now the companys leading channel for reaching consumers. MemberLink turns clients call centers into profit centers by marketing related products and services to callers. Direct-to-consumer Internet marketing is also highly successful. Our client partners include: Eight of the top 10 credit card issues Well-known cataloguers Top travel and leisure companies Direct response marketers Memberworks Inc is a company that needs two things to stay in business. Since they do not have a real product to market or a product that is worth $140 a year and do not wish to have contact with the consumer. They need members who do not check the bank statement or do not know or care to take the time to cancel. They also need a source of new members. Getting new members is were they spend all they money. From looking at there financial statements they spend much more in marketing than any thing else. Below is a typical three month period. Three months ended (Unaudited) in thousands of dollars Revenues $114,045 Expenses: Operating 19,178 Marketing 69,899 General and administrative 18,764 Restructuring charge Amortization of intangible assets 346 ---- - -------- Total expenses 108,187 They spend almost 65% of they income on marketing which is buying your credit or debit card info from a bank, a credit card company, a telemarketer, or a company such as Sears, Aol, a large travel company or any else they can pay to get a shot at your financial info. They spend less than 17% of their income on operating expenses which included their call centers and on actual consumers who think it is a good deal. But i would bet that is less than $5 million per quarter. According to Memberworks, less than 50% of their members renew for a second year. Or in other words, the person checked their statement in the next year. So they need a steady stream of new members. That why they pay millions of dollars to other companies to get a shot at you not noticing the charge. In the financial statements Memberworks it self said they were afraid of members canceling at a higher rate and they were afraid of not having their agreements renewed with some of their sources of credit card numbers. So if people will complain to those banks, credit card companies and companies like AOL, Memberworks will go out of business. Memberworks says it has deals with 8 of 10 credit card companies. Only do business with those two who do not. Call your bank ask if they sell your card info to Memberworks or a company they have an interest in. Move your money. Cancel Aol or like I did. I called and said I was canceling my account and they give me four months for free. I cancel again in June. Call MemberWorks and demand a refund in less than 5 business days. Site with their phone numbers: http://twiki.cageyconsumer.com/MemberWorks Ask how they signed you up? If by So what can you do a company like this???? phone, ask for recording of your voice. Ask how long you have been a member? You may be entitled to several years of refunds. Call your bank or trusted company and ask if they sold your financial info? If they did, include them in any complaint and refuse to do business with them and tell your friends. File a complaint with the federal trade commission and with your state agency. Send e-mail to Bill OReilly, Dateline NBC, 60 minutes, your local stations, newspaper and anyone else you can think of. E-mail your state and Federal representatives to change the law. Here is a site that explains some of the laws. http://www.cga.state.ct.us/2001/rpt/olr/htm/