Search results for: ROSCA

Continuing with its aggressive enforcement of negative option marketing, the Federal Trade Commission (FTC) announced a $35 million settlement with online digital photo and video platform Shutterstock to resolve allegations that Shutterstock violated Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) in connection with its subscription services. The FTC alleged that Shutterstock failed to disclose material terms before billing, charged consumers for products without their informed consent, and made cancellation difficult.

Shutterstock offers consumers several plans for licensing content on its website, varying in price and in the number of downloads available. The complaint alleges that Shutterstock offered most of its content through online subscriptions since at least 2020.

Continue Reading Shutterstock Settles with FTC for $35 Million for Subscription and Negative Option Marketing Practices

Last week, a federal judge in the Northern District of California ruled on Uber’s motion to dismiss a case brought by the Federal Trade Commission (FTC) alleging deceptive practices in connection with its Uber One subscription program. The complaint alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA) and deceptive advertising and marketing misrepresentations in violation of Section 5(a) of the FTC Act and numerous state laws.

FTC Uber Lawsuit and ROSCA Claims

The court granted in part and denied in part the motion to dismiss. The court granted the motion to dismiss as to only two discrete aspects of the complaint. First, it dismissed the FTC’s subclaim challenging Uber’s “$0 delivery fee” representation, holding that the statement was not misleading as a matter of law because it was expressly limited to “eligible” orders and therefore would not lead a reasonable consumer to believe all orders qualified.

Continue Reading FTC v. Uber: California Court Allows Claims against Uber One Subscription to Proceed

Last month, two association groups, the Consumer Federation of America (CFA) and the American Economic Liberties Project (AELP), submitted a Petition for Renewed Click to Cancel Rulemaking attempting to restart the Federal Trade Commission’s (FTC) rulemaking process. The petition asks the FTC to revive the rulemaking process by reopening the Rule Concerning Subscriptions and Other Negative Option Plans, often referred to as the “Click-to-Cancel” rule.

In July, a federal appeals court vacated the Click-to-Cancel rule, holding that it exceeded the scope of the FTC’s authority, was not promulgated in accordance with necessary rulemaking procedures, and was overly broad.

Continue Reading Industry Groups Urge FTC to Revive Click-to-Cancel Rulemaking on Subscription and Negative Option Plans

In her remarks at this year’s ANA Masters of Advertising Law Conference, Commissioner Melissa Holyoak of the Federal Trade Commission (FTC) emphasized three areas where the agency is focusing its consumer protection enforcement mandate: the Children’s Online Privacy Protection Rule (COPPA), Made in USA claims, and price transparency.

Holyoak didn’t comment on press reports that she will soon leave the agency to become U.S. attorney for the District of Utah, with White House staffer Ryan Baasch set to fill Holyoak’s spot.

Price Transparency and the FTC’s Unfair or Deceptive Fee Rule

Regarding price transparency and the FTC’s Unfair or Deceptive Fee Rule, Holyoak stressed that while the rule’s scope is limited to ticket sellers and short-term lodging providers, all companies and their pricing practices remain subject to the Section 5 enforcement.  

Continue Reading FTC’s Melissa Holyoak Outlines Consumer Protection Focus at ANA Advertising Law Conference

This week, the Federal Trade Commission (FTC) announced a settlement with NextMed parent company Southern Health Solutions, Inc., in response to allegations that the telemedicine platform offered deceptive claims and fake reviews to lure consumers into buying its programs.

The FTC charged that NextMed and its founders sold fixed-term weight-loss memberships that provided access to GLP-1 drugs and deceptively advertised costs and expected weight loss outcomes. The case marks the first consumer protection action brought by the Andrew Ferguson-led FTC focused on marketing and membership billing practices in the healthcare space.

The FTC’s recently vacated Negative Option Rule would not have applied here because NextMed sold a fixed‑term membership rather than a negative option plan, and the Restore Online Shoppers’ Confidence Act (ROSCA), which governs negative option features, was likewise not at issue.

Continue Reading FTC Settles with NextMed Over Deceptive Pricing, Hidden Material Terms, and Fake Reviews and Testimonials in Telehealth Membership Programs

The U.S. Court of Appeals for the Eighth Circuit vacated the Federal Trade Commission’s Rule Concerning Subscriptions and Other Negative Option Plans (often referred to as the “Click-to-Cancel” rule) on July 8, just days before the FTC was set to begin enforcement of the rule.

The decision resolved various consolidated petitions challenging the rule on grounds that it exceeded the scope of the FTC’s authority, was not promulgated in accordance with necessary rulemaking procedures, and was overly broad. The winning argument, though, was that the FTC skipped the critical step of issuing a preliminary analysis of the benefits and effects of the proposed rule and any reasonable alternatives, because it initially failed to treat the rule as “economically significant” to the national economy.

Continue Reading Eighth Circuit Cancels FTC Negative Option Rule: What Does It Mean?

On May 15, Federal Trade Commission (FTC) chairman Andrew Ferguson testified before the House Appropriations Committee in support of the FTC’s budget request. His testimony provides insight into the agency’s downsizing and its strategic enforcement priorities moving forward.

Ferguson reported that the FTC is implementing a 10% reduction in its workforce, bringing its headcount to approximately 1,100 employees—the lowest level in a decade. This decision follows the departure of 94 employees earlier in the year, which left the agency with 1,221 full-time staff. Ferguson testified that these measures are essential for aligning the agency’s resources with its current budget and emphasized a return to the FTC’s foundational mission: enforcing laws as written, rather than creating new regulations and policy.

Despite the reductions, Ferguson expressed confidence that the FTC will effectively fulfill its mission of protecting consumers and promoting competition. He highlighted several key consumer protection areas the FTC will prioritize:

Continue Reading Cut to the Chase: FTC Trims Staff but Keeps Enforcement Focus

This week, the Federal Trade Commission (FTC) filed a lawsuit in federal court against rideshare and delivery company Uber for allegedly deceptive subscription practices, including making it unreasonably difficult to cancel.

In the accompanying press release, FTC Chair Andrew Ferguson made clear that regulatory scrutiny of negative option and continuity programs will remain a priority: “Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel. The Trump-Vance FTC is fighting back on behalf of the American people.” The agency voted 2-0-1 to file the complaint, with Commissioner Mark R. Meador recused.

Continue Reading FTC Makes Clear It Will Continue Regulating Subscription Services and Signals Enforcement Priority for Negative Option Rule in Lawsuit Against Uber

In one of the first settlements since the new administration took office, the Federal Trade Commission (FTC) announced a $17 million monetary judgment with Cleo AI to resolve allegations that Cleo violated Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). Cleo operated a personal finance mobile app that purportedly allowed consumers to take out “instant” or same-day cash advances. The vote to authorize the settlement was 2-0.

According to the complaint, Cleo advertised that consumers could access same-day or instant cash advances in the hundreds of dollars. The FTC alleged that when consumers attempted to use Cleo’s services, they were required to enroll in an automatically renewing subscription service where they were charged a subscription cost of $5.99 or $14.99 monthly. Only after the consumers entered in their payment information and enrolled in the subscription service did Cleo disclose to consumers the cash advance they were eligible for.

Continue Reading Cleo AI Settles with FTC for $17 Million for Alleged Misleading Practices and Autorenewal Violations

On March 21, a federal judge in Washington state denied Doxo Inc.’s motion to dismiss a complaint brought by the Federal Trade Commission (FTC) regarding Doxo’s alleged deceptive advertising practices. The FTC’s complaint alleges that Doxo, a third-party online bill pay platform, violated the FTC Act and the Gramm-Leach-Bliley Act (GLB). Doxo provides a third-party bill-paying platform that touts that customers can “pay and manage all [their] bills with one login.”

The FTC alleged Doxo deceived consumers by giving the false impression it was the official payment channel for consumers’ billers and failing to adequately disclose fees being charged. The complaint also alleged Doxo violated the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to clearly and conspicuously disclose material transaction and subscription terms and by failing to obtain informed consent from consumers before signing them up for a subscription service.

Continue Reading Do You Know Who You’re Paying? FTC Lawsuit Against an Online Bill Pay Platform to Proceed