“Free” is one of the most powerful words in advertising. Businesses know that, of course. So may of them promise free trial offers and money-back” guarantees  to attract potential customers. All you have to do is pay a small “shipping and handling fee” and the product is yours.

Some of these risk-free trial offers and money-back guarantees are legitimate. But many of them are scams that violate federal and state consumer protection laws.

A recent FTC case  provides a good example of free trial offers that result in consumers getting charged for products they don’t want without their consent. The defendants in that case (several related companies) advertised, marketed and sold skin care products and dietary supplements through ads they placed on other websites. The ads offered consumers a free trial of a product in return for paying the cost of shipping and handling. Consumers who clicked on the ads were directed to websites owned by the defendants. Anyone interested in the free trial offer had to enter their contact information and billing information, and then click a box that said, “Get My Risk Free Trial” or “Continue”.

The people who accepted the free trial offer thought they were trying out a product for a nominal payment of less than $5.00. But 15 days after they clicked the box and accepted the “free” trial offer, the defendants billed their credit card for the full price of the product – as much as $98.71. Even worse, the defendants enrolled these unfortunate consumers in a “continuity program”. Under the terms of this program, the defendants sent them additional shipments each month and charged them for the full price of the shipped products.

The defendants hid the actual terms of the offer by placing them in small print far below the boxes where consumers entered their contact and payment information or in separate “Terms & Conditions” that could accessed only by clicking on a link. Those terms stated that consumers had a limited time to cancel the trial (usually 15 days) or they would be charged the full price of the product and the additional monthly shipments. Many of the people who tried to cancel the shipments and get a refund were not able to do so.

The continuity program described above is known as “negative option marketing”. It’s  prohibited by a federal law – the Restore Online Shopper’s Confidence Act or ROSCA, for short – unless the business making the offer complies with the law’s provisions. Specifically, ROSCA requires businesses that make negative option offers to: 1) clearly disclose all of the material terms before they charge consumers’ credit cards; 2) get their express informed consent before making a charge; and 3) provide a simple way for consumers to stop future recurring charges to their credit card.

The FTC’s complaint makes it clear that the defendants failed to comply with ROSCA and that their ads were deceptive. Fortunately, a California federal court agreed with the FTC and granted its request for a preliminary injunction. The injunction temporarily halts the operation and freezes the defendants’ assets pending further litigation

It’s easy to believe this would never happen to us. But according to the FTC, the defendants made tens of millions of dollars from consumers who no doubt felt the same way. Be careful in deciding whether to provide your billing information in connection with a free trial offer.

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