The Federal Trade Commission has charged an online marketing operation with deceptively luring people into an expensive negative option scam using an initial low-cost ($1.03, plus shipping and handling) “trial” offer for tooth whiteners and other products.
A federal court temporarily halted the operation and froze its assets at the request of the FTC, which seeks to end the practices.
According to the FTC, the defendants used a network of 78 companies, at least 87 websites, and dozens of bank accounts to hide their ownership and launder the profits from the scheme. They also drove people to their websites via affiliate networks that generate web traffic with blog posts, banner ads and surveys. For example, some consumers got emails inviting them to fill out surveys falsely claiming to be for well-known merchants such as Kohl’s and Amazon, and were directed to the defendants’ websites to claim a “reward” for completing the survey.
The FTC alleges that, using deceptive claims, hidden fine-print disclosures and confusing terms, the defendants tricked consumers into providing their billing information, and then started charging them about $100 a month unless consumers canceled within 8 days. They also used an order confirmation page to trick consumers into signing up for a second monthly subscription, which cost an additional $100, for an identical product. Because of this double-deception, the defendants charged consumers, who reasonably believed they had agreed to a single shipment for $1.03 plus shipping costs, about $200 a month until they canceled both unauthorized subscriptions.