FTC Negative Option Lawsuits: Example Case

Negative Option Scam lawsuit exampleThe Federal Trade Commission constantly files claims against companies that play fast and loose with “free trial” schemes. Authorities punish websites that use trickery and duplicitous terms to enroll people in recurring subscriptions.

Let’s take a look at a hypothetical example of a typical FTC negative option lawsuit.

FTC “Free Trial” Lawsuit: The Overview

Main Accusation: Typically, cases involve companies that use misleading “negative option” checkout processes and technical trickery.

Laws Commonly Cited in E-commerce Negative Option Lawsuits: The Restore Online Shoppers’ Confidence Act and Section 5 of the FTC Act, which deals with “unfair or deceptive” marketing, are the two main laws used in negative option cases.

Consumer Pitches that are Frequently Flagged: The FTC does not like websites that advertise a “free trial” option, but then charge the customers more. These types of sites typically include verbiage like “Risk Free” and “Claim your Free Trial” and “Rush my Free Trial.” Businesses that advertise a refund option, but don’t staff their phones and comply with every refund request, are also playing with legal fire.

How Targeted Operations Typically Work: The FTC goes after websites that conspicuously advertise a “free trial” period, but charge consumers immediately. Enrolling consumers in monthly subscription plans, without making it crystal clear that they’re doing so, is also hugely problematic.

Alleged Fraudulent Marketing Tricks: Tucking barely detectable terms, behind hyperlinks that are further buried in ads, does not pass the FTC “clear and conspicuous” sniff test. Other no-nos include deployment of a purposefully problematic checkout process and unlawful use of shell companies.

Connect with an FTC Defense Lawyer

The FTC constantly censures businesses that violate promotional guidelines. All commercial ventures must comply with Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act.

Our team regularly works with individuals and companies caught in the commission’s regulatory crosshairs. In fact, we’ve even beaten the FTC in court.

If you’re under investigation or want a preventative compliance audit for an upcoming marketing campaign, get in touch. We’ll make sure you’re in line with local, state, federal, and even international standards.

In the meantime, click here to read more about FTC regulations and lawsuits.

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