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January 2011: I TOLD You So! The Restore Online Shoppers' Confidence Act

by Joseph Sanscrainte, an attorney specializing in telemarketing law.

Going back about three years or so, I was providing legal representation to a client that had achieved a certain level of renown in the affiliate marketing space. I had marshaled several of this client's offers through the difficult process of ensuring compliance with FTC mandates, while at the same time enabling such offers to maintain effective sales rates.

My client came to me at one point to have me review a new payment page associated with these offers, and it was at this time I first heard of something called a "forced upsell." Just the name itself was enough to raise suspicions - when dealing with an online offer, or any offer for that matter, the idea that a sale is being "forced" can't be a good thing. What my client presented me was a payment page where a consumer pays for Product A, and in the fine print somewhere below the fold of the webpage appeared language informing the lucky consumer that he was also going to receive Products B and C from other third-party sellers. (Not only that, Products B and C were monthly continuity programs!)

I told my client that this wasn't going to pass muster, but my client came back with the same brilliant rejoinder that I hear from my 11-year old daughter - "but everybody ELSE is doing it!" It was at this point that I realized that a major reckoning was brewing - it was only a matter of time before the FTC and/or Congress intervened on behalf of consumers.

Since then, we've seen the FTC drive upstream to get the credit card associations to put pressure on processors to clean up the online space. And now, as predicted, Congress has stepped in with the recently enacted "Restore Online Shoppers' Confidence Act" (ROSCA). Here's ROSCA in a nutshell:

  • This Act takes the "force" out of forced upsells by requiring that, whenever a third-party seeks to make a sale to a consumer following an initial sale by another entity, the "new" offer must disclose all material terms and conditions, and the purchase can only take place with the "express informed consent" of the consumer. (The "oh, by the way, you may not have noticed but you just purchased two other products" approach is officially history.)
  • In addition, ROSCA prohibits an initial merchant from disclosing any account information collected from a consumer to a third-party seller for use in an internet-based sale of that third-party's goods or services. (This practice of sharing account information is known as "data pass" - from here on in, merchants should take a pass on data pass.)
  • Finally, ROSCA addresses negative option offers in the online environment by requiring merchants to: a) give complete disclosure related to the negative option elements of the offer; b) obtain express informed consent for the sale; c) give consumers the ability to stop recurring charges through a simple process available via the internet and telephone; and d) send a notice about any charge associated with the negative option offer via email to the consumer at least 10-days prior to such charge.

ROSCA is geared toward online offers, but there's a lot of telemarketing that normally gets thrown into the mix of these offers. It therefore behooves telemarketers who may be working such offers to get to know ROSCA and whether the offer is compliant with it.

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