[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>