Do I write about free trials and negative option programs a lot? You betcha, baby. That’s because these programs — when done improperly — hurt consumers and get exactly the kind of attention no marketer wants: from a regulator.
In the latest version of this sad song, the FTC has announced yet another case in a series of recent actions targeting allegedly deceptive free trial programs. Here, the defendants prominently touted "Risk Free" trial offers of skincare products. According to the complaint, the defendants failed to disclose that consumers would be automatically charged full-price for the products, as well as for monthly auto-shipments, unless they cancelled their order within a specified period. Only by clicking on the small "Terms and Conditions" hyperlink in the ads and then scrolling through a pop-up window could consumers find this information/disclosure.
The complaint also alleges that many consumers who tried to cancel their enrollment in the auto-ship plan found it very difficult to do so.
You’ve heard this before, right? In fact, Mastercard must have heard it all the time because it has implemented a new rule for free trials of physical products that requires merchants to gain cardholder approval at the conclusion of a free trial before they start billing. Merchants will be required to send the cardholder – either by email or text – the transaction amount, payment date, merchant name along with explicit instructions on how to cancel a trial.
The Commission’s complaint against a Puerto Rico-based defendant and the companies he controlled alleges violations of the Restore Online Shoppers’ Confidence Act (ROSCA) through negative option marketing. Defendants’ deceptive scheme cost consumers tens of millions of dollars.