FTC Crackdown on Negative Option Marketing

3 Comments

I found some good news on the negative marketing option front. It’s a bit dated (Feb., 2009) and it specifically addresses only diet pills, but it’s a great start.

What is negative option marketing?

That’s the odor you smell when you read the terms and conditions at such sewers as Google Treasure Chest and Easy Google Cash and [fill in any Google name here]. There are probably thousands of such sites.

Negative option marketing is when you sign up for free x, but you’re also signing up for y and z at the same time. If you don’t cancel y and z after the “free trial period,” your credit/debit card is hit with surprise charges.

The problem is that sometimes you are not told about y and z, and sometimes you are told but not clearly, and sometimes you just don’t read the terms and conditions. (Not “you” you—I’ve Tried That readers are too smart for that. I mean the other “you.”)

So What’s the Good News?

The FTC fined two companies for a total of more than $9,000,000 for their negative option marketing practices. You can read the full source article here, but here is the money quote. This is how the companies attracted the attention of the FTC:

Failing to disclose adequately that consumers who order a “free” sample are enrolled in a continuity program, that their accounts will be debited or charged to pay for the program, that they must cancel to avoid extra shipments and debits and charges, and how and when they must cancel to avoid the debits or charges

Debiting or charging accounts of consumers who cancelled or tried to cancel, or those who were not adequately informed of the negative option features or terms and conditions, and therefore did not provide express informed consent for the debits or charges.

Sound familiar? Those are exactly the complaints of thousands of people who signed up for Google Golden Egg Goose (or whatever). If FTC could smack down these diet pill companies, why not the Google scam guys? I’m speculating, but I think there are several reasons:

  1. There are thousands of sites, all of which take pains to hide the owners’ identities.
  2. Many of the sites could be hosted on servers outside the US and owned by citizens of other countries.
  3. Is there a jurisdictional issue? FTC thinks it’s an FBI Internet Crimes Division problem?

Who knows? But it can only help if people continue to file complaints. If you have been a victim of deceptive negative option marketing, click here to file a complaint with the FTC.

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3 Comments

    1. Looks like the FTC is (finally!) doing something about some of the Google scams:

      FTC opens all-out assault on economic cyber-scammers.

      FTC goes after Google Money Tree, Mentoring of America and others in Operation Short Change
      Full story at:
      http://www.networkworld.com/community/node/43177

      Federal Trade Commission v. Infusion Media, Inc., a corporation, also d/b/a Google Money Tree, Google Pro, Internet Income Pro, and Google Treasure Chest, West Coast Internet Media, Inc., a corporation, also d/b/a Google Money Tree, Google Pro, Internet Income Pro, and Google Treasure Chest, Two Warnings, LLC a limited liability company, Two Part Investments, LLC a limited liability company
      (United States District Court for the District of Nevada)
      http://www.ftc.gov/os/caselist/0923060/index.shtm

      Dubbed “Operation Short Change,” the law enforcement sweep announced today includes 15 FTC cases, 44 law enforcement actions by the Department of Justice, and actions by at least 13 states and the District of Columbia.
      Press release:
      http://www.ftc.gov/opa/2009/07/shortchange.shtm

      Now if folks keep on submitting complaints hopefully it’s just a matter of time before they go after all the other “Google Kit” hidden negative option scams as well as the other similar “offers” (resveratrol, teeth whitening, Acai, etc etc etc.

      However until they go after the fake blog / fake news site affiliates and the CPA affiliate networks running these offers too – new versions of these scams are just gonna keep on popping up…

    2. [...] Friday, I published a post about FTC crackdowns on negative option marketing in the diet fad industry. I wondered what the hey [...]

    3. Wish the FTC would do something about Direct Marketing Association who they and several other consumer agencies recommend to consumers to call about unwanted telemarketing. Which is a little suspcious because DMA also sells mailing-warehouse-broker lists to the telemarketers that are sending you 95% SCHEMES-SCAMS-FRAUDS offers. I’ve been getting numerous telemarketing about being a business owner interested in Direct Marketing worldwide for expanding your customer base, the only thing is I am not a business owner. Several BBB complaint responses from telemarketers state who supplied them peoples info on a list to be Direct Marketing Assoc, Cutting Edge Media-True Wealth Magazine, American Name Service(advocate for DMA since 1995) and a few others. I don’t have a credit card in my name, don’t own a business, don’t fill out anything anywhere without checking where it goes first , so I wondered where they actually have come into my information. I called them and asked ,they all dodge answering or say it would take too long for them to research where they actually received your information from but you can call Direct Marketing Assoc. to help you with telemarketers. So after checking with the FTC, FCC, DCA, BBB & U.S.P.S. Post Master General on this Direct Marketing Assoc. they also said this company can help getting telemarketers to stop calling-mailing you for a fee. Did some research on DMA and found out the fee is only $1.00 to help stop telemarketing but when you talk to them they say it will only slow down the telemarketing not stop it and they will not disclose where they got your info from either, they also sell mailing-warehouse-broker lists to telemarketers. Even after I told them about the BBB complaint responses saying the companies that bought their lists claim info from the lists are for business owners/people interested in generating customers or expanding customer base, but I don’t own a business or sell any products. I also tried to explain I don’t have any credit card , never filled out/signed up with anything anywhere stating I was a business owner so what made them put my info on a list sold to telemarketers stating this false info. Still no real answer to my questions, just you can pay the fee and we will try and slow down these telemarketing calls-letters.
      So we can pay a fee (which is only a $1.00) for something we never asked for-signed up-filled out anything anywhere that is a lie that DMA started in the first place and it will only slow down the telemarketing maybe. Sheesh somebody has the market cornered here, sells peoples info to telemarketers and gets recommended by consumer agencies that charge you a fee. I know that there are several ways companies like DMA get peoples info besides you filling out-signing up anywhere and it’s next to impossible to stopping any telemarketing. I did complain and question this recommendation on DMA to each consumer agency above and they all started to refer me to the next agency which the last one was the U.S.P.S. Post Master General who actually (I KID YOU NOT) said you should contact this company Direct Marketing Assoc. on this matter. With that response I figured this was a losing battle, almost feels like filing complaints on telemarketers is hopeless but it does at least name companies that are selling these lists that lies about the people on the lists.
      In the end I never did pay any fee to Direct Marketing Assoc. and I still do file complaints with consumer agencies on telemarketers with a note of DMA always in complaints , which has slowly stopped the numerous telemarketing calls-mailings. So if these telemarketers don’t stop bothering you after telling them to stop, don’t feel bad in filing a complaint with consumer agencies to help get your point across of stop to these telemarketers. While not all complaint responses provide company names of where your info came from to these telemarketers at least it will help stop most unwanted telemarketing and alert/notify consumer agencies to watch these telemarketing companies.

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