Last week, a California court granted a temporary restraining order against Triangle Media, a company that sells various types of products using “risk free” trials. According to the FTC, though, the trials were very risky, involved hidden charges, and violated various laws.
When consumers clicked on ads for Triangle’s products, they landed on websites promoting “risk free” trials. The order flow and payment screens suggested that consumers just had to pay the cost of shipping, which was typically $4.95 or less. Although the shipping costs were presented in bold, black text that was highlighted in yellow, a small gray-on-white disclosure at the bottom of the page mentioned other costs: “By placing an order you will be enrolled in our membership program. This program will charge $4.95 today and $84.71 for your trial full-size product on the 15th day if you do not call to cancel the membership. You will receive a full-size bottle of the product for $84.71 (S&H included) every 30 days thereafter until you cancel.” Consumers who ordered on their phones had to click on another link to see that disclosure.
The FTC alleges that defendants who clicked to start their trials would be directed to a second page which claimed that the order was not complete and suggested that consumers take advantage of another “free trial” of a product that could be paired with the first one. Like the original order page, the only mention of the additional costs appeared in a small gray-on-white disclosure at the bottom of the page. To make matters worse, the FTC alleges that the company made it difficult for consumers who were surprised by the charges to cancel their memberships and obtain refunds.
The FTC filed a complaint against Triangle in California federal court, alleging that the company violated the FTC Act, the Restore Online Shopper’s Confidence Act, the Electronic Fund Transfer Act, and Regulation E. The court temporarily halted the operation, froze the company’s assets, and appointed a temporary receiver over the business.
We’ve covered this type of issue before, so if you read this blog, odds are that you don’t engage in these types of practices. But don’t ignore this case just because your order flows don’t look like Triangle’s. Laws governing free trials can be complicated, and many reputable companies have been hit with lawsuits or regulatory investigations over how they disclose offer terms. If you haven’t looked at your practices recently, now may be a good time to do that, especially given that California’s new rules on automatic renewals have come into effect.