The operators of a worldwide negative option scam have agreed to settle Federal Trade Commission charges that they deceptively advertised “risk-free” trial offers for only the cost of shipping and handling, but then charged consumers full price for the trial product and enrolled them in expensive, ongoing continuity plans without their knowledge or consent.
The court orders resolving the FTC’s complaint bar the defendants from such illegal conduct and require them to turn over more than $9 million in assets.
“Products touted as ‘risk free’ shouldn’t come loaded with hidden costs and obligations,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to bring actions against this kind of deceptive and unfair marketing, and will seek to return money to victimized consumers.”
According to the FTC’s complaint, filed in June 2018, for at least five years, the defendants marketed and sold a variety of products online, including skin creams, electronic cigarettes, and dietary supplements. Advertising through third-party websites, blog posts, and surveys, the defendants offered consumers “RISK FREE” trials of their products. Consumers who clicked on these advertisements were taken to the defendants’ websites, which claimed to offer trials of these products for just the cost of shipping and handling, typically $4.95.
However, consumers who accepted the defendants’ offer were charged as much as $98.71 for the trial, and enrolled in a negative-option plan without their consent. The FTC also alleged the defendants used deceptive order confirmation pages to trick consumers into ordering additional products, for which consumers were charged full price and enrolled in additional negative option plans.
Based on this conduct, the FTC charged the defendants with violating the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), and the Electronic Fund Transfer Act (EFTA). In December 2018, the FTC filed an amended complaint adding two defendants to the case.