Passed by Congress in 2010, the Restore Online Shoppers’ Confidence Act (“ROSCA”) was intended to, among other things, regulate the deceptive billing practices of online businesses. Among the main targets of ROSCA were billing practices that allowed billing without a consumer’s explicit consent, including automatic renewal provisions that locked consumers into automatic payments from which they struggled to escape. Like many such statutes, the regulatory regime was a notice/disclosure/consent regime. That is, the solution to the abusive practices was to require businesses to provide notices and disclosures to consumers and obtain their consent to the respective billing practices involved. As is typical of these regulatory regimes, ROSCA requires that the notice/disclosure be “clear and conspicuous” and that the online business obtain “express” and “informed” consent from the consumer before these recurring charges can begin. Further, notice/disclosure and consent had to be given and obtained prior to the collection of the consumer’s billing information. With respect to recurring charges, the statute requires a business to disclose:

• That recurring charges existed
• That, unless a consumer took action, the consumer would be automatically charged
• The amount of the recurring charges
• The frequency of such recurring charges
• The date such recurring charges are charged
• Any date by which the consumer must take action to stop the recurring charges
• All information necessary to entirely cancel the recurring charges

The federal regulatory agency tasked with enforcement of ROSCA was the Federal Trade Commission (“FTC”). Over the years, the FTC clarified many of the ROSCA statutory requirements. For example, the FTC issued regulations requiring that the notices for recurring charges be given separately from other notices and that at least two consents were necessary: one for the recurring charges and one for the whole originating transaction. In addition, ROSCA’s requirements are also deemed violations of the Federal Trade Commission Act. This means that violations of ROSCA are deemed to be deceptive and unfair business practices.

In any event, for consumers, the major problem has always been cancellation and how to escape being charged every month without enormous hassles and wait times. ROSCA requires that the cancellation mechanism be “at least as easy” as the sign-up mechanism. But that leaves a lot of maneuvering room. For profit and revenue reasons, businesses have deep incentives to make cancellation difficult for consumers. Obviously, a successful cancellation is recurring revenue that “escapes.” Businesses have been inventive in creating strategies and tactics for discouraging cancellation. Efforts have included:

• Burying the cancellation link or button
• Making the process cumbersome
• Requiring extra data and personal information before cancellation can be processed (in a claimed effort to “protect” the consumer from fraud)
• Requiring the consumer to verify the cancellation through text or call and email verification procedures
• Offering new deals or other products to “distract” the consumer from cancellation
• And more

In mid-2024, the FTC adopted a new Final Rule that attempts — yet again — to help consumers. In the past, the FTC’s regulations focused on mechanisms that were “at least as easy” as the signup. The FTC has moved beyond that and requires businesses to “provide a simple mechanism to cancel the negative option feature and immediately halt charges…” This is the so-called “click-to-cancel.” The Rule has three variations dealing with the three most common forms of sign-up: internet, telephone, and in-person. The new rule requires that the same method be available for sign-up as for cancellation. For each, the cancellation method must be “simple” — a “click” for online and a simple statement for a telephone or in-person sign-up. The new Rule also requires that the cancellation take effect immediately.

Contact the FTC Attorneys at Revision Legal

For more information, contact the experienced FTC Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.