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Online Marketers Settle FTC Charges for Deceptive ‘Free-Trial’ Offers

Operators of a negative option scam recently settled FTC charges for offering “risk-free” trials and then charging full price for the trial product and enrolling consumers in a continuous subscription without obtaining consent. The defendants are required to pay over $9 million in consumer refunds.

Defendants’ Deceptive Free-Trial Offers

According to the complaint, in 2014, Triangle Media Corp., Jasper Rain Marketing LLC, Hardwire Interactive, Inc., and Global Northern Trading, Ltd. began offering risk-free trials of skincare products, electronic cigarettes and dietary supplements on third-party websites, blog-posts and surveys. Consumers were told they would receive free product upon payment of shipping costs. However, the defendants failed to adequately disclose that consumers would be charged the full price, approximately $98.71, for the “free” product and be enrolled in a continuity program in which consumers would receive additional shipments at full price on a monthly basis, unless they cancelled the free trial within 15 days. Although the defendants provided information about the negative option plan, such terms were “in barely discernable print far below the colorful graphics and text where consumers input their personal and payment information” or buried in a separate Terms and Conditions which consumers were not required to review before beginning their free trial.

Defendants’ Deceptive Order Confirmation Pages

According to the FTC, the defendants also used deceptive order confirmation pages to “trick consumers into ordering additional products.” These pages informed consumers that their order was not complete until they clicked the “complete checkout” button located under an advertisement for an additional product. Once consumers clicked the complete checkout button they were deemed to have ordered both the original and the additional product. However, the consumers only received a confirmation that either did not list any charges or only listed the shipping charges. Consumers were then enrolled in a monthly subscription for both products without their knowledge or consent. Although the defendants included a hyperlink for consumers to decline the second offer, the link was below a line-break in tiny, faint print which typically read “No, I don’t want to improve my mood.” Additionally, consumers who clicked on the hyperlink were led to a series of web pages that made similar deceptive offers.

Primary Takeaway

This case serves as a reminder that the FTC is closely scrutinizing negative-option marketing. Companies who offer such plans must provide clear and conspicuous disclosures, obtain express informed consent before charging for a product or service, provide consumers with a copy of written authorization, and provide a simple means of cancelling any shipping order to avoid future charges.

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