US Outlaws “Negative Option” Deceptive Online Selling

The U.S. Federal Trade Commission has issued a press release detailing the consumer protections in the Restore Online Shoppers Confidence Act just passed by Congress.

“Congress has passed the ‘Restore Online Shoppers’ Confidence Act’ to combat deceptive online sales tactics that keep charging consumers for goods and services until they cancel their membership. In so-called “negative option” plans, the seller interprets the consumer’s silence or failure to reject goods or services, or to cancel the sales agreement, as acceptance of the offer,” the release said.

The act, which was originally the Senate bill S 3386, spells out three protections for online consumers. It makes it illegal:

— for post-transaction third-party sellers to charge customers unless they spell out the terms of the transaction and get consent to charge their credit cards or bank accounts.

— for online sellers to transfer a consumer’s financial account number to a third party seller.

— for a seller to charge a consumer for goods or services using a negative option feature in an online transaction without disclosure, without consent from him and without providing a simple way to stop the charges.

This will give the FTC a law to use to stop the sleazy operators behind those mysterious charges that appear like magic on your credit card statement in the wake of some online purchases.

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Tom Kelchner is Research Center Manager at Sunbelt Software. Tom is a communications professional with extensive background in computer security, anti-virus application testing and computer virus analysis. He is a former daily newspaper reporter and deputy press secretary to governor of Pennsylvania.