[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