Search results for: ROSCA

Last week, the Federal Trade Commission (FTC) issued a press release, announcing a $100 million settlement with Vonage, an internet-based telephone service company, for alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA). The action underscores the FTC’s continued focus on “dark patterns” and illustrates the agency’s efforts to require companies to go beyond the plain requirements of ROSCA in enforcement settlements.  

The FTC’s complaint alleged that Vonage offered free trials to business and residential customers for telephone plans. Unless the customer took affirmative action to opt out before the trial ended, Vonage would enroll the customer in an autorenewing monthly phone plan.

Continue Reading Vonage, Autorenewals, and the FTC’s Ever-Expanding Interpretation of ROSCA

With several new state laws effective in 2022, it is becoming increasingly difficult for businesses to develop baseline compliance protocols across federal and state automatic renewal laws.

Against this backdrop, federal and state regulators continue to examine the sales practices of companies that sell products and services on an automatically renewing basis; states continue to pass new laws—and strengthen existing laws—that further embolden private plaintiffs and class action lawsuits; and the card brands have imposed increasingly strict requirements on companies offering products and services on a negative option basis.

Here we break down the compliance challenges posed by varying state laws addressing automatic renewal programs (also known as continuous service, continuity, subscription, or negative option programs), how newer card brand rules further stir the pot, and the low-hanging fruit that law enforcement agencies and private plaintiffs are going after for monetary redress and injunctive relief.

Continue Reading State Automatic Renewal Laws Are Starting to Look Like a Patchwork Quilt as the FTC Expands Enforcement of ROSCA

This week, the Federal Trade Commission (FTC) announced a proposed settlement with MoviePass to resolve allegations that the company offered an automatically renewing movie subscription program but blocked paid subscribers from using the advertised services, and failed to adequately secure subscribers’ personal data.

The FTC brought the case against MoviePass under the Restore Online Shoppers Confidence Act (ROSCA), the federal statute governing online negative option programs. The statute requires sellers to clearly and conspicuously disclose all “material terms of the transaction” and obtain consumers’ express informed consent before charging them for online negative option features.

However, the FTC’s complaint did not take issue with the company’s billing disclosures or consent mechanism. Instead, it asserted that the company’s failure to disclose its deceptive tactics that prevented subscribers from accessing all of the advertised benefits violated ROSCA. In the complaint the FTC alleged that MoviePass, Inc deceptively marketed a MoviePass subscription service that allowed customers to view movies at local theaters for a monthly fee. However, once customers purchased a subscription, MoviePass allegedly used various methods to prevent subscribers from accessing the advertised service. For example, to limit the movies that customers could view, MoviePass allegedly blocked account access by invalidating subscriber passwords under the guise of “suspicious activity or potential fraud.” The FTC asserted that resetting a password was cumbersome and often failed, precluding subscribers from regaining access. Next, the FTC alleged that MoviePass’s operators implemented a ticket verification program that required users to submit pictures of their physical movie ticket stubs for approval through the app within a certain time frame after purchase. Users who failed to submit their ticket stubs would be blocked from viewing future movies and could risk subscription termination. Third, MoviePass allegedly used “trip wires” to block certain groups of subscribers—heavy users who viewed more than three movies per month—from using the service to purchase more tickets. These allegations seem to echo statements from the FTC’s Dark Patterns workshop (we blogged about the workshop here), which discussed ways the FTC should address websites and apps that impair consumers’ autonomy, decision making, and choice.

Continue Reading Lights, Camera, Action! FTC Settlement Signals Novel Use of ROSCA

Risk-Free-TrialAs we’ve mentioned before, and as this year is unfolding, it looks like the Federal Trade Commission (“FTC”) is even more desperate to enforce the Restore Online Shoppers’ Confidence Act (“ROSCA”) than we are to find good skin care products.  The FTC has begun expanding its enforcement of ROSCA into various industries, including now the skin care industry.  Perhaps more importantly, the FTC is increasing the stakes on what constitutes adequate disclosures, forcing many marketers to spend less time looking in the mirror and more time looking at their online disclosures.

Last week, the Central District of California entered a Temporary Restraining Order and the FTC issued a complaint, alleging that since at least 2010, a number of defendants had marketed and sold skin care products on a variety of websites that ran afoul the ROSCA, the FTC Act, and the Electronic Funds Transfer Act (“EFTA”).  Continue Reading Court Attempts to Smooth out ROSCA Violations

The Federal Trade Commission (“FTC” or “the Commission”) has clearly subscribed to enforcing ROSCA recently.  On Tuesday, the FTC filed a complaint against DIRECTV’s negative option program and contract pricing structure under Section 5 of the FTC Act and ROSCA.

In the complaint, the FTC alleged that DIRECTV required customers to agree to a mandatory 24-month contract to receive television programming; customers who canceled their subscriptions before 24 months were charged an early cancellation fee.  Although the rates were set at a specific monthly charge for the first year of a 2-year customer agreement, in the second year of the agreement, the FTC alleged that DIRECTV would increase the monthly charges by 50-70% higher than customers paid in the first year.  After the first year of the agreement, customers either had to pay significant cancellation fees or pay the higher monthly price.   Continue Reading FTC Dishes Out ROSCA Complaint with Focus on Disclosures

Most of us are familiar with the pleasant experience of an arranged date or a blind date: dining under the romantic glow of the Golden Arches, learning about a day in the life of Muffin, her pure-bred Persian, or perhaps “going Dutch” on the check when all the fun finally ends.  Add to the mix online dating sites—virtual exchanges of love interests, complete with lists of mostly aspirational hobbies, and yes, user photos from ten years and twenty pounds ago.  When you sign up for an online dating service, you expect these subtle (or not so subtle) misrepresentations from other users.  What you don’t expect is the dating service doing the same—for example, by sending flirtatious notes from made up profiles.  That’s exactly what the FTC alleged last week in its second Restore Online Shopper’s Confidence Act (“ROSCA”) case ever, in which the FTC settled with a dating site for posting fake user profiles in an effort to persuade customers to sign up for premium services.

Continue Reading In Second ROSCA Case, FTC Finds Dating Site Too Clingy

A free trial of a weight loss pill is the best of both worlds, right?  Not according to the FTC, which recently brought its first Restore Online Shoppers’ Confidence Act (ROSCA) case against a group of marketers who advertised exactly that.

Weight loss substantiation is old territory for the Commission.  ROSCA, however, is not.  The FTC’s first ROSCA case, filed in Nevada district court, alleges that health companies made unsubstantiated claims that their dietary supplements would lead to weight loss, muscle building, virility, and improved skin.  More significantly, however, are the allegations surrounding the marketers’ “free trial” and “buy-one-get-one free” offers.  According to the FTC, the companies collected customers’ debit and credit card information in order to enroll customers in a negative option (subscription) program.  While there is certainly nothing wrong with subscription programs on their face, the FTC alleges that the companies here inadequately disclosed the nature of the program – they never clearly told customers their accounts would be charged each month.  ROSCA prohibits marketers from charging customers in an Internet transaction unless the marketer has clearly disclosed all of the material terms of the transaction and obtained customers’ express informed consent. In this case, according to the FTC, the marketers did not provide the required disclosures for a negative-option program before accepting payment; failed to disclose material facts about their refund and cancellation policy, among other facts; and didn’t give customers a simple, effective way to stop the automatic charges.

Continue Reading FTC Says Companies Have a Fat Chance of Getting Away With Deceptive Online Marketing in First ROSCA Case

This week, the Federal Trade Commission (FTC) and the Illinois attorney general announced a settlement with Grubhub Inc. to resolve allegations that the company engaged in an array of unfair and deceptive practices that violated Section 5 of the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), the FTC’s new Impersonation Rule, and Illinois state consumer protection laws. The FTC announced the case as Chair Lina Khan’s tenure at the helm of the FTC comes to an end, and the case highlights many of the approaches Khan has pushed for during her reign.

The complaint alleged that Grubhub, an online food ordering and delivery platform, engaged in practices that harmed diners, delivery workers, and restaurant owners. Grubhub reportedly deceived diners by advertising low or no delivery fees but then added hefty charges at checkout. Even members of the company’s subscription program, Grubhub+, who paid $9.99 per month for “unlimited free delivery,” were charged these additional fees without proper disclosure.

Continue Reading FTC and Illinois Attorney General Settle with Grubhub for Deceptive Practices

Companies that care about avoiding Federal Trade Commission (FTC) action should take heed. Last month, the FTC announced an $8.5 million settlement with Care.com, resolving claims challenging its advertising claims and automatic renewal program.

The challenge demonstrates the FTC’s willingness to use the Restore Online Shoppers’ Confidence Act (ROSCA) to target advertising claims.

Care.com offers a platform connecting job posters and job seekers. Users sign up as basic members or premium members. According to the FTC’s complaint, basic members could create job postings, but only premium members could hire. The FTC alleged that Care.com’s advertising inflated the number of jobs available on its site by including jobs “for which there is little to no chance a job seeker could be hired.”

Continue Reading Handle Autorenewal Programs with Care: Federal Trade Commission Targets Care.com for Alleged Dark Patterns and Earnings Claims

These days, it seems like there are three guarantees in life—death, taxes, and monumental Supreme Court administrative law opinions in the summer. As you’ve probably heard by now, the trend continues this year, including perhaps the largest fireworks display possible (in the administrative law context, that is). If for some reason you’ve been ignoring the news, just recently in Loper Bright Enterprises v. Raimondo, the Supreme Court overruled the Chevron decision and held that courts need not defer to an agency’s interpretation of a statute; rather, courts must exercise independent judgment when determining whether an agency acted within its statutory authority.

There’s a lot to unpack in the 109 pages of majority, concurring, and dissenting opinions. So, we’ll just focus on what this could mean for the recent uptick in agency action coming out of the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB).

Continue Reading The Loper Bright Impact: Agency Action Likely to Face More Scrutiny in Light of the Supreme Court’s Disposal of Chevron Deference