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In this episode of "Clearly Conspicuous," consumer protection attorney Anthony DiResta provides an update on Federal Trade Commission (FTC) actions in the digital commerce space. Mr. DiResta discusses the FTC's core concerns with online transactions, including unclear or deceptive terms and conditions, insufficient privacy protections and failure to comply with the "Click to Cancel" rule. He then outlines a best practices framework for companies seeking to ensure compliance and build consumer trust. His final takeaway: Online commerce must be transparent, be fair and be consumer-centric.
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Podcast Transcript
Anthony DiResta: Welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goal in these podcasts is to make you succeed in this current environment, that's very aggressive and progressive, actually, make you aware of what's going on with the federal and state consumer protection agencies and give you practical tips for success. It's a privilege to be with you today.
Today we discuss how the Federal Trade Commission (FTC) is shaping the standards for fair and transparent online transactions. As digital commerce has become the dominant mode of consumer interaction, the FTC has made clear that online transactions must not only be convenient, but also be fair, transparent and consumer-friendly.
Today, I'll discuss the FTC's key enforcement concerns, and then provide practical guidance — a "best practices" framework — that companies can adopt to ensure compliance and, more importantly, build consumer trust.
The FTC's Core Concerns
So let's start with the FTC's core concerns. First, unclear or deceptive terms and conditions.
The FTC has consistently emphasized that material terms must be clear, conspicuous and easily understood. Hidden conditions, fine print disclosures or buried hyperlinks will not suffice. For example, subscription plans or free trials that automatically renew without clear notice have triggered FTC actions under ROSCA, the Restore Online Shoppers' Confidence Act. The legal standard is this: Disclosures must be "clear and conspicuous," meaning they appear in close proximity to the offer, in plain language and before the consumer commits.
Now let's talk about lack of adequate privacy protections. The FTC views data privacy as central to consumer protection. Companies that collect personal information must:
- obtain informed consent
- limit use to the purposes disclosed
- implement reasonable security measures
Failing to safeguard personal data or misrepresenting privacy practices can violate Section 5 of the FTC Act, which prohibits deceptive or unfair practices. And recent cases against data brokers and social media companies underscore the commission's focus on "privacy by design."
Now let's talk about the failure to comply with the "Click to Cancel" rule. The FTC's new "Click to Cancel" rule — part of its proposed updates to the Negative Option Rule — mandates that businesses offer a simple online mechanism for consumers to cancel recurring subscriptions. If you can subscribe with one click, you must be able to cancel with one click. Complicated or hidden cancellation pathways, or requiring consumers to call or chat to cancel, violate the rule. This initiative reflects the FTC's intent to eliminate "dark patterns" or manipulative design tactics that make it hard for consumers to exercise their choices.
Now let's talk about unreasonable or difficult cancellation processes. Even apart from the "click to cancel" requirement, the FTC has taken enforcement actions where businesses create friction in cancellation. For example, long hold times, aggressive retention tactics or requiring multiple steps. The principle is simple: Consumers should be able to exit as easily as they entered. The agency considers obstructive cancellation systems to be an unfair practice.
Next, there's the issue of failure to provide remediation or refunds. When consumers experience product defects, billing errors or deceptive advertising, the FTC expects companies to offer prompt and fair remediation. Failure to honor refunds, repair obligations or warranty claims can result in enforcement. The commission's posture here is to restore consumer confidence by ensuring they have meaningful recourse.
Then there's the issue of customer service barriers and "headaches." The FTC is also targeting customer service systems that frustrate resolution — for instance, unresponsive chatbots, circular FAQs or hard-to-reach human support. Such systems do not only violate consumer expectations but may also be considered unfair if they cause substantial injury not reasonably avoidable by consumers. In essence, the FTC's enforcement focus is driven by a central theme: Companies must design their digital ecosystems for honesty, clarity and respect for consumer autonomy.
Compliance and Best Practices Framework
So with that background, let's talk about compliance and best practices. First, there's the design for transparency. You've got to ensure that all terms — including pricing, renewal, data use and cancellation policies — are visible and understandable before purchase. Use plain language and readable formatting and avoid legalese. Present key terms in proximity to the "submit" or the "buy" button.
Then, privacy by design. Integrate data protection into product architecture from the outset. Provide clear privacy notices, limit data collection and secure user consent. Regularly audit data flows and third-party integrations for compliance. Treat consumer data as a trust asset, not a commodity.
Then simplify cancellation and consent mechanisms. Implement a "one-click cancel" or similarly frictionless method for ending subscriptions. Confirm cancellations immediately and send written confirmation. Avoid manipulative "dark patterns" that confuse or mislead. Think of it this way: Friction breeds enforcement, clarity breeds trust.
And establish fair remediation protocols. Maintain clear refund and complaint resolution policies. Ensure customer support is accessible — by phone, by email or by chat — within reasonable timeframes. Track consumer complaints and use them as an early warning system for compliance issues.
Really build a culture of compliance, folks. Provide regular training for marketing, legal and customer service teams. Establish internal reviews of website flows, sign-up processes and communications. And view compliance not as a legal burden, but as a competitive advantage, a way to reinforce credibility and strengthen brand reputation.
Conclusion
So here's the key takeaway. The FTC's message is unmistakable: Online commerce must be transparent, be fair and be consumer-centric. Organizations that internalize these principles not only minimize legal risk but also elevate their brand as trustworthy stewards of the digital economy.
So folks, stay tuned to further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.
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.
