[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3386 Engrossed in Senate (ES)]
111th CONGRESS
2d Session
S. 3386
_______________________________________________________________________
AN ACT
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
websites 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 websites. 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) Application with Other Law.--Nothing in this Act shall be
construed to supersede, modify, or otherwise affect the requirements of
the Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) or any
regulation promulgated thereunder.
(d) 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) 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--
(i) the initial merchant;
(ii) a subsidiary or corporate affiliate of
the initial merchant; or
(iii) a successor of an entity described in
clause (i) or (ii).
SEC. 4. NEGATIVE OPTION MARKETING ON THE INTERNET.
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 (as defined in the
Federal Trade Commission's Telemarketing Sales Rule in part 310 of
title 16, Code of Federal Regulations), unless the person--
(1) provides text that clearly and conspicuously discloses
all material terms of the transaction before obtaining the
consumer's billing information;
(2) obtains a consumer's express informed consent before
charging the consumer's credit card, debit card, bank account,
or other financial account for products or services through
such transaction; and
(3) provides simple mechanisms for a consumer to stop
recurring charges from being placed on the consumer's credit
card, debit card, bank account, or other financial account.
SEC. 5. 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) 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.
(c) Authority Preserved.--Nothing in this section shall be
construed to limit the authority of the Commission under any other
provision of law.
SEC. 6. 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 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 obtain appropriate
injunctive relief.
(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--
(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.--No separate suit shall be brought under this
section if, at the time the suit is brought, the same alleged violation
is the subject of a pending action by the Federal Trade Commission or
the United States under this Act.
Passed the Senate November 30, 2010.
Attest:
Secretary.
111th CONGRESS
2d Session
S. 3386
_______________________________________________________________________
AN ACT
To protect consumers from certain aggressive sales tactics on the
Internet.