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
FTC
Republication
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:
The counts:
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
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