[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3386 Reported in Senate (RS)]
Calendar No. 500
111th CONGRESS
2d Session
S. 3386
[Report No. 111-240]
To protect consumers from certain aggressive sales tactics on the
Internet.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 19, 2010
Mr. Rockefeller (for himself, Mr. Pryor, Mr. Nelson of Florida, Ms.
Klobuchar, Mrs. McCaskill, and Mr. LeMieux) introduced the following
bill; which was read twice and referred to the Committee on Commerce,
Science, and Transportation
August 2, 2010
Reported by Mr. Rockefeller, with an amendment
[Strike all after the enacting clause and insert the part printed in
italic]
_______________________________________________________________________
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,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>
<DELETED> This Act may be cited as the ``Restore Online Shoppers'
Confidence Act''.</DELETED>
<DELETED>SEC. 2. FINDINGS; DECLARATION OF POLICY.</DELETED>
<DELETED> The Congress finds the following:</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
<DELETED>SEC. 3. PROHIBITIONS AGAINST CERTAIN UNFAIR AND DECEPTIVE
INTERNET SALES PRACTICES.</DELETED>
<DELETED> (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--</DELETED>
<DELETED> (1) before obtaining the purchaser's billing
information, the post-transaction third party seller has
clearly and conspicuously disclosed to the purchaser all
material terms of the transaction, including--</DELETED>
<DELETED> (A) a description of the goods or services
being offered;</DELETED>
<DELETED> (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</DELETED>
<DELETED> (C) the cost of such goods or services;
and</DELETED>
<DELETED> (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--</DELETED>
<DELETED> (A) obtaining from the consumer--
</DELETED>
<DELETED> (i) the full account number of the
account to be charged; and</DELETED>
<DELETED> (ii) the consumer's name and
address and a means to contact the consumer;
and</DELETED>
<DELETED> (B) an additional affirmative action from
the consumer, such as clicking on a confirmation button
or checking a box that indicates the consumer's consent
to be charged the amount disclosed.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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--</DELETED>
<DELETED> (1) before obtaining the purchaser's initial
agreement to participate in the negative option plan, the
seller has clearly and conspicuously disclosed all material
terms of the transaction, including--</DELETED>
<DELETED> (A) the name of the entity offering the
goods or services;</DELETED>
<DELETED> (B) a description of the goods or services
being offered;</DELETED>
<DELETED> (C) the cost of such goods or
services;</DELETED>
<DELETED> (D) notice of when billing will begin and
at what intervals the charges will occur; and</DELETED>
<DELETED> (E) the length of any trial period,
including 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;</DELETED>
<DELETED> (2) the seller has obtained the express informed
consent described in subsection (a)(2) from the purchaser
before charging or attempting to charge the purchaser's credit
card, debit card, bank account, or other financial account on a
recurring basis;</DELETED>
<DELETED> (3) the seller enables the purchaser to stop
recurring charges from being made to the purchaser's credit
card, debit card, bank account, or other financial account
through a simple process that is available via--</DELETED>
<DELETED> (A) the Internet; and</DELETED>
<DELETED> (B) telephone; and</DELETED>
<DELETED> (4) not less than 10 days prior to the initiation
of each charge to a purchaser's credit card, debit card, bank
account, or other financial account, the seller has sent the
purchaser an e-mail (at an e-mail account provided by the
consumer) that clearly and conspicuously discloses--</DELETED>
<DELETED> (A) that a charge will be made to the
consumer's credit card, debit card, bank account, or
other financial account;</DELETED>
<DELETED> (B) the amount of the charge and a
description of the goods and services for which the
consumer will be charged; and</DELETED>
<DELETED> (C) instructions for stopping recurring
charges in accordance with the requirements of
paragraph (3).</DELETED>
<DELETED> (d) 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.</DELETED>
<DELETED> (e) Definitions.--In this section:</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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)).</DELETED>
<DELETED> (3) Post-transaction third party seller.--The term
``post-transaction third party seller'' means a person that--
</DELETED>
<DELETED> (A) sells, or offers for sale, any good or
service on the Internet;</DELETED>
<DELETED> (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</DELETED>
<DELETED> (C) is not a subsidiary or corporate
affiliate of the initial merchant.</DELETED>
<DELETED>SEC. 4. ENFORCEMENT BY FEDERAL TRADE COMMISSION.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (b) Regulations.--Notwithstanding any other provision of
law, the Commission may promulgate such regulations as it finds
necessary or appropriate under this Act under section 553 of title 5,
United States Code.-</DELETED>
<DELETED> (c) Powers of Commission.--</DELETED>
<DELETED> (1) In general.--The Commission shall prevent any
person from violating this Act and any regulation prescribed
under 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.</DELETED>
<DELETED> (2) 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.</DELETED>
<DELETED> (d) Authority Preserved.--Nothing in this section shall be
construed to limit the authority of the Commission under any other
provision of law.</DELETED>
<DELETED>SEC. 5. ENFORCEMENT BY STATE ATTORNEYS GENERAL.</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (b) Initiation of Civil Action.--</DELETED>
<DELETED> (1) Notice to commission required in all cases.--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.</DELETED>
<DELETED> (2) Filing of complaint.--A State may initiate the
civil action by filing a complaint--</DELETED>
<DELETED> (A) at any time after the date on which
the 30-day period ends; or</DELETED>
<DELETED> (B) earlier than such date if the
Commission consents to an earlier initiation of the
civil action by the State.</DELETED>
<DELETED> (C) Form of notice.--The written notice
required by this paragraph may be provided by
electronic mail, facsimile machine, or any other means
of communication accepted by the Commission.</DELETED>
<DELETED> (c) Intervention by the commission.--The Commission may
intervene in such civil action and upon intervening--</DELETED>
<DELETED> (1) be heard on all matters arising in such civil
action; and</DELETED>
<DELETED> (2) file petitions for appeal of a decision in
such civil action.</DELETED>
<DELETED> (d) Construction.--Nothing in this section shall be
construed--</DELETED>
<DELETED> (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</DELETED>
<DELETED> (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.</DELETED>
<DELETED> (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.</DELETED>
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 purchaser's billing information,
the post-transaction third party seller has clearly and
conspicuously disclosed to the purchaser 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 purchaser's initial agreement to
participate in the negative option plan, 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, including 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
(F) 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 purchaser before
charging or attempting to charge the purchaser's credit card,
debit card, bank account, or other financial account on a
recurring basis; and
(3) the seller enables the purchaser to stop recurring
charges from being made to the purchaser's credit card, debit
card, bank account, or other financial account through a simple
process that is available via--
(A) the Internet; or
(B) e-mail.
(d) 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.
(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 under 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 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.
Calendar No. 500
111th CONGRESS
2d Session
S. 3386
[Report No. 111-240]
_______________________________________________________________________
A BILL
To protect consumers from certain aggressive sales tactics on the
Internet.
_______________________________________________________________________
August 2, 2010
Reported with an amendment