by Lisa Dubrow
Last month the FTC filed another suit against a group of online marketers for violating the FTC Act and Restore Online Shoppers’ Confidence Act (“ROSCA”). The company allegedly marketed golf-related products and cooking gadgets under the names Kitchen Advance; Gourmet Cooking Online; Gourmet Cooking Rewards; Medicus Golf; Kick X Tour Z Golf Balls; Golf Online Academy; Golf Tour Partners; and Purestrike and Swing Clinicbut.
The defendants offered continuity plans and trial offers that were touted as risk free and subject to a 100% money back guarantee. According to the FTC complaint, the defendants’ websites, TV infomercials, and emails deceived consumers into believing that the products and services advertised were free by failing to clearly and conspicuously disclose that consumers would be charged if they did not cancel the “free trial” or return the “free” product.
The FTC complaint states, in part, that some or all of the brand offers:
- failed to obtain consumers’ express informed consent before charging their credit card accounts for goods and services;
- misrepresented that consumers can receive trial shipments for free or for a nominal shipping or handling fee without adequately disclosing that the consumer had to return the shipment at their own expense to avoid additional charges;
- did not adequately disclose the terms of their offers before a consumer clicks “add to cart”;
- made it difficult to return trial products, cancel continuity plans, and obtain refunds;
- deceptively placed disclosures about the negative option plans below the fold (i.e., below the portion of a web page a user can see on a typical computer monitor without scrolling down the page) or beneath the submit button before the purchasing decision was made and on the check-out page in another “column”;
- surrounded disclosures by distracting graphics, advertising claims that were more prominent than the disclosures, and combined them with other issues such as privacy, product availability and warranty terms;
- failed to address the lack of adequate disclosure on smaller mobile devices;
- used cryptic billing descriptors;
- limited refunds to those charged within 30 or 90 days in contradiction to a 100% money back guarantee.
The complaint in this FTC action serves as a roadmap and checklist for legal compliance when running negative option promotions and is yet another reminder of how important it is to comply with the FTC’s “.com disclosure” Guidelines on how to make effective disclosures when selling online.