The Florida Attorney General has settled with FWM Laboratories, a dietary and health supplement marketing company, after consumers were unable to cancel free trial subscriptions before they began receiving bills. The company offered 15-day free trials under the condition that consumers could cancel their subscriptions during the trial period to avoid receiving bills. Consumers complained to the Florida Attorney General after they were unable to reach FWM Laboratories to cancel their subscriptions before their trial period ended and were allegedly billed a monthly fee of $80 or more for products they did not order or want. In addition to paying more than $34 million in refunds to its customers, FWM Laboratories agreed to pay $200,000 in attorneys' fees and costs, is required to clearly and explicitly disclose to customers how and when products may be returned, and must maintain adequate customer service resources to timely process future cancellation requests.
TIP: Continuity programs face considerable scrutiny from regulators. If your company uses continuity programs, ensure that you follow the FTC's guidelines and obtain consumers' express consent to the material terms and conditions of the program. The FTC has indicated that these material terms include: that the consumer will continue receiving merchandise unless the consumer cancels, that delivery will occur without further action by the consumer, a description of the merchandise, minimum purchase requirements, how often deliveries will be made, an explanation of the billing procedures, the refund or return policy, how to cancel, and the price of the goods including shipping and handling.