Consumer protection law passed by Congress four years ago is finally picking up steam
Four years after Congress passed the Restore Online Shoppers’ Confidence Act (ROSCA), the consumer protection law is finally picking up steam.
On the heels of Washington becoming the first state to file a lawsuit under ROSCA, the FTC has taken its first action alleging violations of the 2010 statute. In a complaint filed Oct. 7, the agency alleges that a group of marketers in Nevada and California made upwards of $32 million over a four-year span in part by engaging in deceptive marketing practices designed to purposely withhold important billing information from consumers.
“They not only deceived consumers about the effectiveness of their products, but also repeatedly debited consumers’ accounts without their approval,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.
In addition to unsupported weight-loss claims, the lawsuit alleges that Health Formulas, LLC and others fail to clearly disclose the full material terms of their “free” trial offers advertised online and elsewhere as only costing the price of shipping and handling, which is typically $6.95 or less. What’s not adequately communicated to consumers, the lawsuit alleges, is that by signing up to try a green coffee bean extract or another dietary supplement, consumers are also enlisting in a “continuity membership program” that ships products to them every month at additional costs — some as high as $210 per month. Often, consumers don’t realize they’re being billed until they see the charges on a credit card or bank statement. The company also failed to give consumers an easy way to stop the charges.
Known as negative-option offers, these types of shady transactions are exactly what ROSCA was designed to protect online shoppers against. The law requires that all material terms — such as those recurring charges in a negative-option offer — be clearly disclosed before a consumer is charged in an Internet transaction.
“It’s an arrow in our quiver,” John Andrew Singer of the FTC’s Bureau of Consumer Protection said of ROSCA in August, after the agency opted not to expand its own rule on negative-option offers in favor of waiting to see “the full effects” of ROSCA. He noted the agency had introduced other protections since its negative option rule was first established in the 1974, including the Telemarketing Sales Rule (which the FTC alleges the marketers also in this case violated) and Dot Com Disclosures.
TINA.org reached out to the FTC for comment on its first action with ROSCA but the agency declined to offer judgment on the case or how it anticipates using ROSCA in the future. We wondered if the ubiquitous nature of dietary supplements online may lead to more lawsuits filed under ROSCA.
Two days after the FTC filed its complaint, a U.S. district court ordered that the defendants in the agency’s lawsuit temporarily halt business. The FTC is seeking a permanent injunction as well as a yet undetermined amount of restitution for consumers.
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Stronger rules for motorists are fine, but what about extortion on the roads?
While driving from Delhi to Bharatpur a few days ago, I was again struck by how the sight of a police check-post on highways spells fear and in the hearts of commercial motorists and of those driving out-of-state cars. This 200km drive involves going through four states: Delhi, Haryana, Uttar Pradesh and Rajasthan. Apart from the extortionist tolls, there is the frequency of ‘check-posts’ along the way and not just at state ‘borders’. The aim is to establish bonafides, for security purposes, or catch vehicles for not complying with motor vehicle laws.
Local vehicles, though, go about flouting every law in the book; some of these experiences are enough to put one off road trips for a very long time. My vehicles are always in more than ‘street-legal’ condition, to the extent that even though they are private vehicles and I carry a private driving licence, I always have a fire-extinguisher, an above-average first-aid kit, as well as all documents required under the law. In addition, I also carry a full set of attested photocopies of the registration certificate and driving licence and you will soon appreciate why.
I was driving my seven-year-old diesel Swift, with my wife and another older lady in the car. I also happened to be wearing a white shirt from my Navy days, which has two pockets and shoulder flaps, something like what pilots and commercial drivers also wear.
I choose to wear these shirts because of the two huge pockets which have button-down flaps. At the Haryana-UP ‘border’, policemen waved us down at a check-post and asked me to disembark and show all the papers. I showed them the attested photocopies. “Give us the originals,” they said, which I refused. Then they took a closer look at the licence and realised that maybe I wasn’t a commercial driver, so now they moved on to the other documents, which were also in order, and could find nothing wrong.
“Where is the first-aid kit?” They finally asked and, as luck would have it, the kit was not in the car, because I had prepared the other Swift for the trip but took this one instead. So I told them that I don’t have it.
The cops then said that they would have to issue a judicial challan, for which I would have to appear in court after two days or more because a long weekend was coming up, and maybe the car would also have to be seized. That’s when I finally told them to go do their worst. But I assured them that my lawyers would come and contest this, and then take it all the way up the bureaucratic chain. I pulled out my camera as well as dash-cam and said I would record them, with the ladies as witness. All this was happening on the busy Delhi-Agra highway in the middle of the day.
To cut a long story short, the cops said I could leave, but the larger question is: What if it was in the night? What if the driver had been a commercial licence-holder? What if the driver did not have the wherewithal to challenge this atrocious behaviour? Bringing in stronger rules for motorists on the road is fine, but who is going to do anything to protect us from those who are supposed to be implementing these rules?
Towing is fine but what about public transport?
The latest news in Delhi is that wrongly parked cars will now be towed away under the Swachh Bharat Abhiyaan. Hopefully, this will improve the traffic situation in the capital. To give readers an idea—it took about two hours to drive 150km from Bharatpur to outer Faridabad and then about three and a half hours to drive from outer Faridabad to south Delhi. Even within residential colonies, there are parking wars going on, as people buy more, and bigger, cars. Rather than towing wrongly parked cars, providing better public transport should be the order of the day; NOT buying and selling more cars.