Restore Online Shoppers' Confidence Act - Defines "post-transaction third party seller" as a person that: (1) sells, or offers for sale, any good or service on the Internet; (2) solicits purchases on the Internet through an initial merchant after the consumer has initiated a transaction with the initial merchant; and (3) is not a subsidiary or corporate affiliate of the initial merchant.
Makes it unlawful for any post-transaction third party seller to charge or attempt to charge any consumer's credit card, debit card, bank account, or other financial account in an Internet-based transaction, unless: (1) before obtaining the consumer's billing information, the seller has disclosed all material terms, including the fact that the seller is not affiliated with the initial merchant; and (2) the seller has received the express informed consent.
Makes it unlawful for an initial merchant to disclose such financial account number or other billing information to any such seller (sometimes referred to as a data-pass).
Makes it unlawful, subject to exception, for any person to charge or attempt to charge a consumer for goods or services sold in an Internet-based transaction through a "negative option feature." Defines "negative option feature" as a provision under which the customer's failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.
Prohibits construing this Act to supersede or otherwise affect the Electronic Fund Transfer Act or any regulation thereunder.
Treats a violation of this Act or any regulation thereunder as an unfair or deceptive act or practice. Requires the Federal Trade Commission (FTC) to enforce this Act.
Authorizes any state attorney general to bring an action on behalf of the state's residents to enjoin further violation, to compel compliance with this Act, to obtain damages, or to obtain other appropriate relief.
[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5707 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 5707
To protect consumers from certain aggressive sales tactics on the
Internet.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 1, 2010
Mr. Space introduced the following bill; which was referred to the
Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To protect consumers from certain aggressive sales tactics on the
Internet.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Restore Online Shoppers' Confidence
Act''.
SEC. 2. FINDINGS; DECLARATION OF POLICY.
The Congress finds the following:
(1) The Internet has become an important channel of
commerce in the United States, accounting for billions of
dollars in retail sales every year. Over half of all American
adults have now either made an online purchase or an online
travel reservation.
(2) Consumer confidence is essential to the growth of
online commerce. To continue its development as a marketplace,
the Internet must provide consumers with clear, accurate
information and give sellers an opportunity to fairly compete
with one another for consumers' business.
(3) An investigation by the Senate Committee on Commerce,
Science, and Transportation found abundant evidence that the
aggressive sales tactics many companies use against their
online customers have undermined consumer confidence in the
Internet and thereby harmed the American economy.
(4) The Committee showed that, in exchange for ``bounties''
and other payments, hundreds of reputable online retailers and
Web sites shared their customers' billing information,
including credit card and debit card numbers, with third party
sellers through a process known as ``data pass''. These third
party sellers in turn used aggressive, misleading sales tactics
to charge millions of American consumers for membership clubs
the consumers did not want.
(5) Third party sellers offered membership clubs to
consumers as they were in the process of completing their
initial transactions on hundreds of Web sites. These third
party ``post-transaction'' offers were designed to make
consumers think the offers were part of the initial purchase,
rather than a new transaction with a new seller.
(6) Third party sellers charged millions of consumers for
membership clubs without ever obtaining consumers' billing
information, including their credit or debit card information,
directly from the consumers. Because third party sellers
acquired consumers' billing information from the initial
merchant through ``data pass'', millions of consumers were
unaware they had been enrolled in membership clubs.
(7) The use of a ``data pass'' process defied consumers'
expectations that they could only be charged for a good or a
service if they submitted their billing information, including
their complete credit or debit card numbers.
(8) Third party sellers used a free trial period to enroll
members, after which they periodically charged consumers until
consumers affirmatively canceled the memberships. This use of
``free-to-pay conversion'' and ``negative option'' sales took
advantage of consumers' expectations that they would have an
opportunity to accept or reject the membership club offer at
the end of the trial period.
SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE INTERNET
SALES PRACTICES.
(a) Requirements for Certain Internet-Based Sales.--It shall be
unlawful for any post-transaction third party seller to charge or
attempt to charge any consumer's credit card, debit card, bank account,
or other financial account for any good or service sold in a
transaction effected on the Internet, unless--
(1) before obtaining the consumer's billing information,
the post-transaction third party seller has clearly and
conspicuously disclosed to the consumer all material terms of
the transaction, including--
(A) a description of the goods or services being
offered;
(B) the fact that the post-transaction third party
seller is not affiliated with the initial merchant,
which may include disclosure of the name of the post-
transaction third party in a manner that clearly
differentiates the post-transaction third party seller
from the initial merchant; and
(C) the cost of such goods or services; and
(2) the post-transaction third party seller has received
the express informed consent for the charge from the consumer
whose credit card, debit card, bank account, or other financial
account will be charged by--
(A) obtaining from the consumer--
(i) the full account number of the account
to be charged; and
(ii) the consumer's name and address and a
means to contact the consumer; and
(B) requiring the consumer to perform an additional
affirmative action, such as clicking on a confirmation
button or checking a box that indicates the consumer's
consent to be charged the amount disclosed.
(b) Prohibition on Data-Pass Used To Facilitate Certain Deceptive
Internet Sales Transactions.--It shall be unlawful for an initial
merchant to disclose a credit card, debit card, bank account, or other
financial account number, or to disclose other billing information that
is used to charge a customer of the initial merchant, to any post-
transaction third party seller for use in an Internet-based sale of any
goods or services from that post-transaction third party seller.
(c) Limitations on Use of Negative Option Feature in Internet-Based
Sales Transactions.--It shall be unlawful for any person to charge or
attempt to charge any consumer for any goods or services sold in a
transaction effected on the Internet through a negative option feature,
unless--
(1) before obtaining the consumer's initial agreement to
participate, the seller has clearly and conspicuously disclosed
all material terms of the transaction, including--
(A) the name of the entity offering the goods or
services;
(B) a description of the goods or services being
offered;
(C) the cost of such goods or services;
(D) notice of when billing will begin and at what
intervals the charges will occur;
(E) the length of any trial period;
(F) a statement that the consumer's account will be
charged unless the consumer takes affirmative action
and the steps the consumer must take to the avoid the
charge; and
(G) instructions for stopping the recurring charges
in accordance with the requirements of paragraph (3);
(2) the seller has obtained the express informed consent
described in subsection (a)(2) from the consumer before
charging or attempting to charge the consumer's credit card,
debit card, bank account, or other financial account on a
recurring basis; and
(3) the seller enables the consumer to stop recurring
charges from being made to the consumer's credit card, debit
card, bank account, or other financial account through a simple
process that is available via the Internet and email.
(d) Application With Other Law.--Nothing in this Act shall be
construed to supersede, modify, or otherwise affect the requirements of
the Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) or any
regulation promulgated thereunder.
(e) Definitions.--In this section:
(1) Initial merchant.--The term ``initial merchant'' means
a person that has obtained a consumer's billing information
directly from the consumer through an Internet transaction
initiated by the consumer.
(2) Negative option feature.--The term ``negative option
feature'' has the meaning given that term in section 310.2(t)
of the Federal Trade Commission's Telemarketing Sales Rule
regulations (16 C.F.R. 310.2(t)).
(3) Post-transaction third party seller.--The term ``post-
transaction third party seller'' means a person that--
(A) sells, or offers for sale, any good or service
on the Internet;
(B) solicits the purchase of such goods or services
on the Internet through an initial merchant after the
consumer has initiated a transaction with the initial
merchant; and
(C) is not a subsidiary or corporate affiliate of
the initial merchant.
SEC. 4. ENFORCEMENT BY FEDERAL TRADE COMMISSION.
(a) In General.--Violation of this Act or any regulation prescribed
under this Act shall be treated as a violation of a rule under section
18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair
or deceptive acts or practices. The Federal Trade Commission shall
enforce this Act in the same manner, by the same means, and with the
same jurisdiction, powers, and duties as though all applicable terms
and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et
seq.) were incorporated into and made a part of this Act.
(b) Regulations.--Notwithstanding any other provision of law, the
Commission may promulgate such regulations as it finds necessary or
appropriate to carry out this Act under section 553 of title 5, United
States Code.
(c) Penalties.--Any person who violates this Act or any regulation
prescribed under this Act shall be subject to the penalties and
entitled to the privileges and immunities provided in the Federal Trade
Commission Act as though all applicable terms and provisions of the
Federal Trade Commission Act were incorporated in and made part of this
Act.
(d) Authority Preserved.--Nothing in this section shall be
construed to limit the authority of the Commission under any other
provision of law.
SEC. 5. ENFORCEMENT BY STATE ATTORNEYS GENERAL.
(a) Right of Action.--Except as provided in subsection (e), the
attorney general of a State, or other authorized State officer,
alleging a violation of this Act or any regulation issued under this
Act that affects or may affect such State or its residents may bring an
action, as parens patriae, on behalf of the residents of the State in
any United States district court for the district in which the
defendant is found, resides, or transacts business, or wherever venue
is proper under section 1391 of title 28, United States Code, to enjoin
further violation, to compel compliance with this Act and any
regulation issued under this Act, to obtain damages, restitution, or
other compensation on behalf of residents of such State, or to obtain
such further and other relief as the court may deem appropriate.
(b) Notice to Commission Required.--A State shall provide prior
written notice to the Federal Trade Commission of any civil action
under subsection (a) together with a copy of its complaint, except that
if it is not feasible for the State to provide such prior notice, the
State shall provide such notice immediately upon instituting such
action.
(c) Intervention by the Commission.--The Commission may intervene
in such civil action and upon intervening may--
(1) be heard on all matters arising in such civil action;
and
(2) file petitions for appeal of a decision in such civil
action.
(d) Construction.--Nothing in this section shall be construed--
(1) to prevent the attorney general of a State, or other
authorized State officer, from exercising the powers conferred
on the attorney general, or other authorized State officer, by
the laws of such State; or
(2) to prohibit the attorney general of a State, or other
authorized State officer, from proceeding in State or Federal
court on the basis of an alleged violation of any civil or
criminal statute of that State.
(e) Limitation.--Whenever a civil action has been instituted by or
on behalf of the Federal Trade Commission for violation of this Act or
any regulation prescribed under this Act, no State may, during the
pendency of such action instituted by or on behalf of the Commission,
institute a civil action under subsection (a) of this section against
any defendant named in the complaint in such action for violation of
this Act or any regulation prescribed under this Act as alleged in such
complaint.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
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