Thought that the FTC and California planned to cool off on enforcing trial and subscription programs? Think again. The FTC and California continue to bring these actions with alarming regularity.
For those of you who haven’t been tracking these issues, last year California’s Automatic Renewal Law was amended to tighten the restrictions on continuity programs. The amendments increased restrictions on companies providing trial or discounted introductory programs, and required companies to provide an “exclusively online” cancellation mechanism for consumers who originally accepted the service agreement online.
In addition, both the FTC and the California Autorenewal Task Force (a team of district attorneys who enforce the statute) have brought multiple challenges against companies offering continuity programs. We wrote a few weeks ago about the FTC’s settlement with Urthbox, which included charges challenging how that company’s free trial and subscription offerings were disclosed.
The Urthbox settlement followed California’s autorenewal task force’s settlement with j2 Global. That settlement was unsurprising in most respects (it imposed $1.2 million in monetary redress, required the company to provide “clear and conspicuous” disclosures, obtain affirmative consent from consumers before charging the consumer, provide post-purchase confirmation, and afford consumers an easy cancellation mechanism). However, the order bears noting because it expanded the definition of “consumer,” which the California statute defines as “any individual who seeks or acquires, by purchase or lease, any goods, services, money, or credit for personal, family, or household purposes.” The order expanded the statute’s reach to any “individual consumer with a California billing zip code,” thereby reaching individuals outside the traditional definition of consumer.
The j2 Global case came on the heels of the FTC announcing its case against F9 Advertising, alleging violations of the federal Restore Online Shoppers’ Confidence Act, which governs online negative option and continuity programs. These settlements are not alone, as California has brought cases against DropBox, AdoreMe, multiple dating websites, and others, demonstrating that the California task force and FTC aren’t showing any signs of slowing their enforcement of these laws.
With the landscape surrounding trial and continuity programs shifting rapidly, advertisers would be wise to double-check that their programs comply with the most up-to-date laws and regulators’ expectations. And advertisers shouldn’t bank on falling outside the reach of these laws. Otherwise, they run the risk of falling onto regulators’ radar.