The new Restore Online Shoppers' Confidence Act in
the US aims to restrict deceptive online sales tactics and mandates
heightened transparency for online sellers. The Act introduces
three restrictions that target post-transaction sales by
third-parties and negative option marketing.
The first two restrictions address sales that are solicited by a
third-party through an initial merchant with whom a consumer has
entered into an online transaction — for example, a
third-party's offer to a consumer for a magazine subscription
after the consumer has finished giving their billing information to
an online retailer to purchase a video game. The Act addresses this
type of transaction by:
prohibiting the initial merchant from disclosing
(i.e., passing along) a consumer's billing information
to any post-transaction third-party seller for use in an online
requiring any post-transaction third-party seller to clearly
and conspicuously disclose the material terms of the third-party
sale to the consumer (including that the third-party is
unaffiliated with the initial merchant), and, following this
disclosure, to collect billing information from the consumer and
have the consumer perform an additional affirmative consenting
action (such as clicking a confirmation button).
The third restriction under the Act addresses negative option
marketing. Here, negative option marketing means interpreting a
consumer's silence or failure to take an affirmative action to
reject goods or services or to cancel an agreement as acceptance of
the offer. The Act prohibits the use of a negative option unless:
(i) the material terms are clearly and conspicuously disclosed
before obtaining the consumer's billing information; (ii) the
consumer gives express informed consent before their account is
charged; and (iii) a simple mechanism is provided to stop recurring
Responsibility for enforcing these provisions is given to both
the Federal Trade Commission and the attorney general for each
This Act is the result of a Senate Committee investigation into
aggressive online sales tactics, including the passing along of
consumer billing data by many reputable online retailers to
third-parties. In many cases, those third-parties then used
aggressive and deceptive tactics to enrol consumers in paid
membership clubs as part of the initial sales process such that
consumers would think the offers were part of the initial purchase,
rather than a new transaction with a new seller. While the new law
arose in response to such deceptive practices, the provisions apply
more broadly and so all sellers must take care to ensure
McCarthy Tétrault Notes:
In Canada, consumer protection laws that guard against different
forms of negative option billing and other deceptive marketing
practices vary by province. Privacy laws, such as the Personal
Information Protection and Electronic Documents Act
(PIPEDA), serve to restrict disclosure without consent of
consumer billing information that is personal information.
Businesses that are involved in online sales to US consumers, or
that are contemplating an expansion to include US consumers, should
ensure that their online sales practices conform to these new
rules. Particular attention should be paid to the fact that
disclosure of material terms under this Act must occur prior to the
collection of billing information.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Software license agreements generally require the customer to pay fees for the software license and related services, which fees are usually based upon the duration of the license and the manner in which the customer is allowed to use the software, together with applicable taxes and withholdings.
In less than nine months, on July 1, 2017, persons affected by a contravention of Canada's anti-spam legislation will be able to invoke a private right of action to sue for compensation and potentially substantial statutory damages.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).