On September 13, 2017, the Federal Trade Commission announced that a group of online marketers was ordered to pay more than $2.5 million to settle charges that they deceived consumers. The defendants were accused of using “free” and “risk-free” trials for golfing and cooking products to get customers locked into a monthly subscription.
The FTC complaint was filed in March of 2017. According to that complaint. The defendants offered “free” products, without clearly disclosing that consumers accepting the “free” product would be charged a subscription fee each month, if they did not cancel. The group was also accused of misrepresenting their return, refund and cancellation policies.
The settlement orders prohibit the defendants from engaging in similar tactics in the future. The defendants will also be required to clearly disclose important details associated with any online negative option in which consumers are asked to enter billing information, to get the customer’s consent before charging them, and to devise an easier way for consumers to cancel recurring payments.
The order bars the defendants from billing customers that were first charged before March 1, 2016. They will also be prohibited from benefiting from the consumer’s personal information and should dispose of it properly. The order against Joshua Bernheim and Brian Bernheim imposes a judgment of $1,869,690. The total is expected to be paid in four installments within a year.
The order against Robert Koch carries a judgment of $632,304. Koch will be required to pay the total in full in three installments within a year.