Definition
Requires companies to obtain consumer's consent before charging their credit or debit cards for goods or services offered through a "negative option feature."
Excerpt
It shall be unlawful for any person to charge or attempt to charge any consumer for any goods or services sold in a transaction effected on the Internet through a negative option feature (as defined in the Federal Trade Commission's Telemarketing Sales Rule in part 310 of title 16, Code of Federal Regulations), unless the person—
(1) provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer's billing information;
(2) obtains a consumer's express informed consent before charging the consumer's credit card, debit card, bank account, or other financial account for products or services through such transaction; and
(3) provides simple mechanisms for a consumer to stop recurring charges from being placed on the consumer's credit card, debit card, bank account, or other financial account.
Related cases
Vonage was held liable by the court for charging customers without their consent, failure to provide required disclosures, and not offering simple mechanisms for customers to cancel their telephone services.
ABCmouse agreed to pay $10 million and change its marketing and billing practices after the FTC found it misled consumers about cancellations, withheld information and charged memberships without consent.
UrthBox engaged in offering a supposedly "free" trial without adequately disclosing hidden subscription charges and misrepresenting consumer reviews as independent.
Health Formulas was held liable for fraudulent "free trials" luring consumers into enrolling for a membership program.
Vermont held AdoreMe liable for hidden subscriptions, misrepresenting time-limited discounts, and obstructing subscription cancellations.
FTC enforcement action against Amazon relating to Amazon Prime subscription, including explicit mappings in the complaint to five types of "dark patterns"