As readers of this blog know, regulation and enforcement of auto-renew programs is a regular topic. That's because the FTC has been busy enforcing ROSCA and many of the states have passed new laws governing auto-renew programs, where consumers' cards are billed on a periodic and ongoing basis until they cancel their subscription. There has also been a fair amount of local enforcement and class action activity. The critical requirements are providing clear and conspicuous disclosures of the auto-renew feature, obtaining the consumer's express affirmative consent, and making it easy for the consumer to cancel. (See previous posts for additional specific requirements in some states).
Now NAD is looking at these programs too. One Technologies, LLC, challenged claims made by ConsumerTrack, Inc. for its GoFreeCredit.com product offering a "Free Credit Score" or "Credit Report Check for $1". The challenger argued that these offers were misleading because they did not clearly and conspicuously disclose that a consumer would have to sign up for an ongoing $19.95 monthly subscription in order to get the free credit score or $1 credit report. The challenger submitted screenshots showing that users have to scroll down the page, past the "View Score Now!" button and a Service Agreement, to read the "OFFER DETAILS" in small print.
Since the advertiser declined to participate in the NAD challenge, NAD referred the advertising to the FTC. In its Decision about the referral, however, NAD noted that the issues raised by the challenge would have been appropriately addressed by self-regulation. It stated that "[a]lthough both FTC regulations and ROSCA lay out specific requirements related to the disclosure of negative option offers, NAD's role is to analyze the messages reasonably conveyed by the challenged offers and not whether they meet the FTC and ROSCA requirements for negative option plans." Here, NAD would have grappled with the issue of whether the "free" and "$1" credit report offers were misleading because they failed to adequately disclose the material conditions of those offers, i.e., the need for a subscription. Thus, NAD noted, the issue was squarely within its traditional purview.
With the popularity of auto-renew programs, it seems likely that NAD will have further occasion to address them.
Case Report #6344
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