The Federal Trade Commission has stopped an online scheme that allegedly lured consumers with “free” access to their credit scores and then billed them a recurring fee of $29.95 per month for a credit monitoring program they never ordered.  The three companies have agreed to pay $22 million for consumer refunds under a settlement with the FTC and the state attorneys general in Illinois and Ohio.

The defendants marketed their credit monitoring programs, MyCreditHealth and ScoreSense, through at least 50 websites, including FreeScore360.com, FreeScoreOnline.com and ScoreSense.com.  According to the FTC, they bought advertising on search engines such as Google and Bing so that ads for their websites appeared near the top of search results when consumers looked for terms such as “free credit report.”  The most prominent ad stated, “View your latest Credit Scores from All 3 Bureaus in 60 seconds for $0!”

According to a complaint filed by the FTC, Illinois, and Ohio, the defendants failed to clearly disclose that consumers who accessed their credit score through their websites would be enrolled in a credit monitoring program and incur monthly charges until they called the defendants to cancel.  At least 210,000 consumers contacted banks, credit card companies, law enforcement agencies, and the Better Business Bureau to complain about the scheme.

The only way consumers could cancel their membership and request refunds was to call a toll-free number.  Consumers often had to make repeated calls to secure their cancellation or refund. The defendants often denied refunds to those who claimed they did not knowingly enroll.

The FTC alleged that the defendants violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits charging consumers for goods or services sold online via a negative option unless the seller clearly discloses all material terms before obtaining the consumer’s billing information, obtains the consumer’s express informed consent before making the charge, and provides a simple way to stop recurring charges. 

They were also charged with violating the Illinois Consumer Fraud Act and the Ohio Consumer Sales Practices Act.

Under the proposed settlement order, the defendants are permanently prohibited from violating ROSCA, misrepresenting material facts about any product or service marketed with a negative option, misrepresenting material terms of any refund or cancellation policy, and failing to clearly disclose, before a consumer consents to pay via a negative option, all materials terms of any such policy.

They are also barred from failing to honor a refund or cancellation request that complies with such a policy, and failing to provide a simple mechanism for consumers to stop recurring charges – at least as simple as the mechanism consumers used to initiate the services.

In addition, the defendants are prohibited from failing to disclose, before a consumer agrees to pay for something via a negative option, the name of the seller or provider or the name of the product or service as it appears in billing statements, a product description and its cost, the length of any trial period, and the mechanism to stop any recurring charges.  The defendants are also barred from using billing information to obtain payment for any product or service marketed with a negative option without the consumer’s prior express informed consent, as prescribed in the court order.

{ 0 comments }

California Anti-SPAM Decision Clarifies Rule on Issue of Identifying Sender in Body of Commercial Email

October 31, 2014

The California Court of Appeal ruled in a putative class action, Rosolowski et al. v. Guthy-Renker LLC, that a commercial email header does not violate California’s anti-SPAM statute “merely because it does not identify the official name of the entity which sent the email, or merely because it does not identify an entity whose domain name is […]

Read the full article →

Former Employee Faces Trade Secrets Lawsuit Over Maintaining LinkedIn Contacts

September 23, 2014

On September 16, 2014, the U.S. District Court for the Central District of California declined to dismiss a California trade secrets claim against a man who kept his LinkedIn contact information after he was fired and created a rival business (Cellular Accessories for Less, Inc. v. Trinitas LLC).  The court wrote that issues of material fact remained […]

Read the full article →

Class Action Lawsuit Alleges Whey Protein Manufacturers Engaged in “Protein Spiking”

September 3, 2014

On August 25, 2014, a class action lawsuit was filed in the U.S. District Court for the Eastern District of New York on behalf of consumers that purchased the protein supplement “Body Fortress Super Advanced Whey Protein.  The named Defendants are United States Nutrition, Inc., Healthwatchers, Inc., and parent company, NBTY, Inc. The Complaint alleges that, Body Fortress […]

Read the full article →

Use of Privacy Service Leads to In Rem Jurisdiction in Anticyberquatting Consumer Protection Act Case

August 14, 2014

On August 7, 2014, the U.S. District Court for the Eastern District of Virginia held that a cybersquatting complainant established that it could not obtain personal jurisdiction over a typosquatting registrant by showing that the true registrant was unknown due to the use of a privacy service, the U.S. District Court for August 7 (Central Source […]

Read the full article →
Elektronik Sigara - ukash