The FTC has filed an injunction to expand their efforts to stop online marketers. The group has successfully stopped a group of San Diego-based marketing companies from conducting deceptive free trial offers which appeared to be harming consumers. Here’s what we know about how the FTC stopped online marketers:
Consumer Affairs reports that the FTC obtained a federal court order against three firms — Triangle Media, Jasper Rain Marketing, and Hardware Interactive. It charged the companies of leading consumers to believe that they were being offered a free trial when in actuality they were being sold products without their knowledge or consent.
“Defendants advertise, market, promote, distribute, and sell skincare products, electronic cigarettes, and dietary supplements online,” the FTC said in its complaint. “Defendants claim to offer trials of these products for just the cost of shipping and handling, typically $4.95 or less.”
Charged as much as $98
But in reality, the FTC said some consumers who accept the trial offers got charged as much as $98 for a single shipment, then enrolled them in a subscription program without their knowledge or consent, charging their credit cards each month.
“Consumers who discover Defendants’ charges and seek a refund often find that they are unable to get their money back because of Defendants’ undisclosed refund restrictions,” the FTC charged. “Defendants have brought in tens of millions of dollars through their deceptive trial offers.”
The FTC successfully petitioned the court for a temporary injunction against the companies while the case is decided in court.
Very common before 2010
Free trial offers that ended up enrolling consumers in unwanted subscriptions were once very common, but they have been pervasive since Congress passed the Restore Online Shoppers’ Confidence Act in 2010.
Previously, many third party marketers had relationships with other well-known companies. After a consumer completed a purchase with that well-known company, the third party marketer offered the consumer a free trial of a product.
Many times consumers accepted these offers, unaware that the well-known company they were doing business with was sharing their credit card information with the third party marketer, who then enrolled them in an ongoing subscription program, charging their credit cards each month.
The Restore Online Shoppers’ Confidence Act requires any third party marketer making these kinds of offers to clearly disclose all material terms of the transaction and obtain the consumer’s express informed consent to the charge.
And perhaps more importantly, the seller must obtain the number of the account to be charged directly from the consumer, not from another company with whom the consumer is doing business.
“Free trial offer” should be a red flag for consumers, especially those making online purchases. Free trials are rarely free, especially if consumers are required to provide credit card information in order to receive it.
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