Consumers tricked into paying 2,000% more

Posted by Clyde Hutchins | Aug 14, 2017 | 0 Comments

Consumers tricked into paying 2,000% more

The Federal Trade Commission (FTC) is suing a marketing scheme that tricked consumers into spending 2,000 percent of what they thought they had agreed to pay. The defendants are charged with violating the FTC Act and the Restore Online Shoppers' Confidence Act. In its complaint, the FTC alleges that a group of 78 companies worked together to trick consumers into signing up for auto-shipments and recurring charges. Through various marketing efforts, the consumers were led to "back door" landing pages of various websites offering personal care products. The websites would present "free trial offers" to the consumers. The only charge was a $1.03 shipping charge. When the consumers gave their credit card information to pay for the shipping charge, they were automatically entered into two monthly plans. They were charged a $100 a month from each plan for monthly auto-shipments of products. The charges would continue from month to month until cancelled. The "back door" landing pages did not disclose the auto-shipments or recurring charges as required by law.

The group of companies were involved in various aspects of the operation, including call centers, shipping centers, setting up merchant accounts and operating accounts for payments to affiliate marketers. I write this in the past tense as the FTC obtained a temporary restraining order against the companies.

Some of the business entities were formed in Wyoming and Colorado. The case was filed in Nevada.

About the Author

Clyde Hutchins

Clyde Hutchins is the founder of Harmony Law. Prior to opening Harmony Law, Mr. Hutchins worked in the Wyoming Attorney General's Office for several years where he developed a strong consumer protection enforcement unit. In that position he led over 120 investigations and enforcement actions under the Consumer Protection Act. He worked on numerous joint cases with the Federal Trade Commission and other states, including Colorado, on consumer protection matters. Mr. Hutchins is also a contributing author to Consumer Protection Law Developments, Second Edition. Previous to his work in the Attorney General's Office, Mr. Hutchins was in private practice in Anchorage, Alaska where he was the chief litigator for a firm. Mr. Hutchins represented municipalities on various matters. Mr. Hutchins provided counsel to businesses and investment advisors regarding compliance with securities laws. He was also a bond lawyer and worked on municipal financing matters. Prior to that, Mr. Hutchins practiced civil litigation with a law firm in Cheyenne, Wyoming. Mr. Hutchins devotes his spare time to his family, traveling and enjoying the great outdoors.


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