The Federal Trade Commission aggressively enforces the Restore Online Shoppers’ Confidence Act (“ROSCA”) against online marketers that offer Internet-based automatic renewals and subscriptions. Basically, ROSCA requires the clear and conspicuous disclosure of material terms, affirmative consent to certain cancellation requirements in online transactions.
The FTC has the ability to seek monetary relief, in addition to injunctive relief, for ROSCA violations. A violation of ROSCA is considered an unfair deceptive act or practice which subjects sellers to civil monetary penalties. State attorneys general may also have a cause of action.
What are the Bascis of a ROSCA Violation?
Some rather obvious components of a ROSCA violation include, but not are not limited to, a misleading “risk-free” trial offer, an undisclosed charge if consumers do not quickly cancel the “risk-free” trial, an undisclosed automatic shipment program that sends consumers unordered merchandise, difficult to follow upsells that add another layer of confusion, unlawful charges to consumers’ credit or debit cards, difficult cancellation procedures, straw owners that conceal operators’ activities and/or conceal operations from payment processing entities and banks.
Do Individual States Have Their own Automatic Renewal Laws?
Automatic renewal and subscription laws (ARLs) are in place in a number of states. Many have even recently amended and bolstered their ARLs. Failure to comply can result in private plaintiff actions, class action lawsuits and regulatory action.
At the state level, approximately two-dozen states have implemented ARL legislation. Some states impose additional consent and disclosure requirements if the subscription begins with a free trial.
The Federal Trade Commission (FTC) recently requested comments on potential updates to its 2013 FTC Dot Com Disclosure Guidance: How to Make Effective Disclosures in Digital Advertising. Generally speaking, the purposes of the Guidance is to provide information to digital advertisers in order to comply with the law.
The FTC Act’s prohibition on “unfair or deceptive acts or practices” encompasses online advertising, marketing, and sales. In addition, many FTC rules and Guides are not limited to any particular medium used to disseminate claims or advertising, and therefore.
The Guidance sets forth instructions on avoiding express and implied deceptive statements. It also provides guidance regarding disclosures, including what to incorporate into the underlying claim, ensuring that disclosures are “clear and conspicuous,” what to consider with video and audio disclosures, taking account of the various devices and platforms consumers may use to view advertising, how to approach space-constrained ads, what constitutes permissible use of hyperlinks, evaluating technological limitations or unique characteristics of communications methods,
The FTC plans to increase investigation and enforcement within the digital marketing industry. The agency is also seeking input on “dark pattern” tactics and advertising used to deceive consumers, as well as automatic renewal subscriptions and free trials, social media advertising, online marketplaces and lead generation referrals.
“We know that some companies are wrongly citing our current guides to justify dark patterns and other forms of digital deception,” said FTC attorney Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.
About This Blog and Hinch Newman’s Advertising + Marketing Practice
Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/judicial process. This blog is sponsored by Hinch Newman LLP.