E-commerce: Consumer protection: Competition: Restore Online Shoppers’ Confidence Act (ROSCA): Continuity plans: Negative Options: Injunction: FTC:
Time for a ROSCA recap: FTC says “risk free trial” was risky – and not free
By: Lesley Fair | Jul 3, 2018
Like the three sides of a triangle, ROSCA – the Restore Online Shoppers’ Confidence Act – has three basic compliance requirements for online sellers who enroll consumers in continuity plans, often known as negative options. The law bans online negative options unless the seller: 1) clearly discloses all material terms of the deal before obtaining a consumer’s billing information; 2) gets the consumer’s express informed consent before making the charge; and 3) provides a simple mechanism for stopping recurring charges.
A federal district court has granted the Federal Trade Commission’s request to stop a group of San Diego-based Internet marketers from deceptively advertising free trial offers and not only charging consumers full-price for the trial product, but also enrolling them in expensive, ongoing continuity plans without their knowledge or consent. The court order announced today temporarily halts the operation, freezes its assets, and appoints a temporary receiver over the business.
The complaint for permanent injunction and other equitable relief:
Count 1: Misrepresentations of the price of the trial offers
Count 2: Misrepresentation that order is not complete
Count 3: Failure to disclose adequately material terms of trial offer
Count 4: Unfairly charging consumers without authorization
Count 5: Violations of ROSCA – Auto-renewal continuity plan, violations of the Electronic Fund transfer Act and Regulation E
Count 6: Unauthorized debiting from Consumers’ accounts