The Federal Trade Commission (FTC) has been granted a temporary restraining order barring several online marketers from engaging in allegedly deceptive sales practices in violation of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
The FTC’s complaint against Triangle Media Corporation, Jasper Rain Marketing LLC, Hardwire Interactive Inc., and Brian Phillips, the alleged owner of Triangle Media Corporation, accuses the defendants of several deceptive practices in the marketing and sale of various products including dietary supplements, skin creams, and electronic cigarettes. In particular, the defendants allegedly offer “RISK FREE” trials of products supposedly in exchange for only the cost of shipping—in reality, consumers are charged as much as $98.71 for trial shipments and are automatically enrolled in negative-option continuity plans that continue to ship them the product monthly for full price.
Through their other negative option plans, the defendants allegedly make it very difficult to cancel recurring subscriptions and to obtain refunds.
Takeaway: Negative option plans continue to be an enforcement priority for the Commission, with strict guidelines for how they may be operated fairly and transparently for consumers. Falsely telling consumers that they are receiving something for “free” is also carefully scrutinized. With both federal and state regulators paying attention to these hot areas, marketers considering sales strategies in any way similar to those described here are advised to be aware of the law and very cautious.