Monday, October 18, 2021

FTC Alleges “Risk-Free” Trials Came with Hidden Charges

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Richard B. Newmanhttp://www.hinchnewman.com
Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

The Federal Trade Commission has filed a complaint against a group of online marketers, alleging that they deceived consumers with “free” and “risk-free” trials for access to various gadgets and online subscription services.

According to the FTC, the defendants violated the FTC Act and the Restore Online Shoppers’ Confidence Act by asking people for their credit card information to cover shipping and handling, and then charging them for products and services without consent.

As set forth in the complaint, the defendants’ websites, TV infomercials and email deceived consumers by representing that products and services were free, without clearly and conspicuously disclosing that consumers would be charged if they did not cancel the “free trial” or return the “free” products.

They also allegedly misrepresented their return, refund and cancellation policies, burying related terms in mouseprint addressing other issues such as product availability and warranty terms, accessible via an inadequate hyperlink; and, after consumers submitted their billing information for an initial purchase, solicited separate purchases of additional products through a upsell web pages before reaching a final confirmation page for the initial purchase.

The individual defendants allegedly formulated, directed, controlled, had the authority to control or participated in the unlawful acts and practices. The corporate defendants allegedly operated as a common enterprise and conducted the business practices through an interrelated network of companies that have common ownership, officers, managers, business functions, employees and office locations.

The case is Federal Trade Commission v. AAFE Products Corp., et al. The complaint can be seen, here.

Negative option offers disguised as “free trials” or “free gifts” are a regulatory compliance hotbed. Contact an FTC Defense Lawyer for additional information regarding negative option compliance-related issues.

 

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

 

 

 

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