The Federal Trade Commission (FTC) yet again took action against a company for failing to clearly and conspicuously disclose the terms of its product offers. NutraClick is involved in marketing nutritional supplements. After receiving thousands of consumer complaints against NutraClick, LLC, the FTC took action against the company to halt its deceptive trade practices. According to the FTC, consumers were misled by NutraClick's "free trial" offer, and did not realize that they were being signed up for a membership program that charged them up to $80 a month. (I have discussed this marketing technique before.) Additionally, consumers had difficulty in cancelling the membership program.
The FTC alleged that NutraClick violated the FTC Act by failing to adequately disclose the the automatic renewal terms. (I discuss what constitutes "clear and conspicuous" disclosure here.) The FTC also alleged that NutraClick violated the Restore Online Shoppers Confidence Act, a subject I have discussed here before.
The FTC and NutraClick agreed to a stipulated order that prohibits NutraClick from:
- Obtaining consumer's information without full disclosure of the material terms, any recurring charges, and the cancellation methods;
- Failing to send written confirmation after the transaction;
- Charging consumers unless written authorization first obtained; and
- Failing to provide a simple method of cancellation.
NutraClick also had to pay the FTC $350,000.
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