14 DAY TRIAL // The United States Congress has passed a law to put an end to deceptive online sales tactics that involve charging consumers for additional services on the basis that they didn't clear a checkbox.
The new legislation, called the "Restore Online Shoppers' Confidence Act," was introduced on May 19, 2010, by Sen. Rockefeller (D-WV). The bill was unanimously approved by the Senate on December 1 and yesterday it passed the House vote.
According to the Federal Trade Commission (FTC) the new legislation makes it illegal for companies to transfer the financial data of customers to third-party sellers and bans them from using so called "negative options."
By "negative option" the FTC refers to the practice of deceptively inserting offers into transactions with the purpose of charging consumers for additional services.
For example, an individual goes to the website of an online travel agency with the purpose of booking a flight. After they choose their tickets and are happy with the price, they proceed to checkout.
At this point the website automatically inserts a travel insurance plan offered by some third-party partner into the package and adds its cost to the total.
There is a checkbox somewhere on the page to opt-out from buying the additional service, but it is hidden away among disclaimers and terms of service agreements, which happen to state that the plan is not refundable.
Knowing that they only selected the airline ticket, the customer fails to observe the additional cost and hits next, at which point their credit card is charged for a service they didn't want and which is provided by a different company than the one they chose to do business with.
This is actually used a lot in scams across the Internet. Users are encouraged to take a survey or an IQ quiz, at the end of which they are asked for their phone number allegedly to receive additional information. Unfortunately, somewhere on the page there is an option checked stating that they agree to subscribe to a $9.99/month SMS service.
"We’re pleased Congress passed this legislation. Too many companies are trying to use phony monthly billing to rip off Americans and this bill will help strengthen our hand," said FTC Chairman Jon Leibowitz.