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FTC Settlement Provides Guidance on Getting a Consumer's Express Informed Consent

The Federal Trade Commission settled with "Green Millionaire Book" promoters. The FTC alleged the defendants lured consumers with a supposedly "free" book falsely promising that it would show them how to power their cars and homes at no cost, and then billed them for an online magazine they never ordered.

The Federal Trade Commission settled with "Green Millionaire Book" promoters. The FTC alleged the defendants lured consumers with a supposedly "free" book falsely promising that it would show them how to power their cars and homes at no cost, and then billed them for an online magazine they never ordered. The defendants have agreed to a settlement that requires them to pay almost $2 million for consumer refunds, and permanently bars them from making misleading product claims. The settlement also goes into great detail as to the disclosures and process that must be followed to get a consumer's express informed consent.

The specific requirements are as follows:

Disclosures

The settlement prohibits the defendants from use billing information to obtain payment from a consumer unless prior to using such information the defendants obtained express informed consent of the consumer. To get express informed consent the following must be clearly and conspicuously disclosed in relation to the request for the consumer's express informed consent:

  1. A description of the good, product, program, or service being offered;
  2. The specific billing information to be used;
  3. All fees and costs, including shipping and handling or processing fees;
  4. The entity on whose behalf the payment will be assessed, if the entity is not clearly and conspicuously disclosed in the Defendants' advertisements;
  5. How the charge will appear on consumers' billing statements, if the billing statements do not contain the name of the entity or product on whose behalf the payment will be assessed;
  6. The amount of any subsequent charges and, if applicable, the dates or frequency of any subsequent charges, including renewals;
  7. All material restrictions, limitations, or conditions applicable to the purchase, receipt, or use of the good, product, program, or service that is the subject of the offer; and
  8. The steps that the consumer must take to cancel, or, if applicable, obtain a refund for, the good, product, program, or service that is the subject of the offer.
Use of a Click Button

The settlement also states that in connection with communications made through the Internet or other web-based applications or services, the consumer must indicate such assent by clicking on a button that is specifically labeled to convey such assent, or other substantially similar method.

Disclosure Must Be Clear and Contain No Additional Information

The settlement also stated that for all written offers (including over the Internet or other web-based applications or services): a check box, signature, or other substantially similar method, that consumers must affirmatively select or sign to accept the negative option feature. Immediately adjacent to such check box, signature, or substantially similar method, defendants shall disclose all costs associated with the negative option feature, that the consumer is agreeing to pay such costs, the length of any trial period, and that consumers must cancel to avoid being charged. This disclosure shall contain no additional information and shall be clear and conspicuous in relation to any other information provided on the page related to costs, risks, or obligations associated with any negative option feature, including terms such as "free," "discounted," "risk free," "no risk," "trial," or "no obligation."

The settlement also details what disclosures have to be provided to the consumer after sign up.

Confirmation of Order

The settlement requires the defendants to send the consumer written confirmation of any transaction involving a service, no later than the lesser of ten days after the date of the transaction or half the time of any trial period, via first class mail, or electronic mail if the transaction is made over the Internet or other web-based applications or services, with its purpose identified in a clear and conspicuous manner on the outside of the envelope, or in the subject heading, that includes all the information that is stated above, and a clear and conspicuous statement of the procedures by which the consumer can cancel or obtain a refund.

Although the terms of this settlement are only binding on the defendants, these terms set forth what the FTC currently views as complaint business practices and should be carefully considered by all marketers.

To learn more about our Internet law practice, click here.

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